,.,„ 


MEN    AND    MYSTERIES 


WALL    STREET, 


JAMES  K.  MEDBERY. 


WITH     ORIGINAL     ILLUSTRATIONS. 


BOSTON: 

FIELDS,    OSGOOD,    &  CO. 
1870. 


Entered  according  to  Act  of  Congress,  in  the  year  1870,  by 

FIELDS,     OSGOOD,     &    CO., 
to  the  Clerk's  Office  of  the  District  Court  for  the  District  of  Massachusetts. 


UNIVERSITY  PRESS:  WELCH,  BIGELOW,  &  Co., 
CAMBRIDGE. 


TABLE    OF    CONTENTS. 


CHAPTER    I. 

PAGB 
PRELIMINARY  ....        1 


CHAPTER    II. 

THE  NEW  YORK  STOCK  EXCHANGE 13 

CHAPTER     III. 
A  DAY  AT  THE  BOARDS 25 

CHAPTER    IV. 
THE  MACHINERY  OF  SPECULATION 45 

CHAPTER    V. 
MARGINS  AND  THE  LOAN  MARKET 64 

CHAPTER    VI. 
THE  METHODS  OF  SPECULATION 81 

CHAPTER    VII. 
CONCERNING  STOCK-BROKERS 109 

CHAPTER    VIII. 

HABITS  AND  HUMORS  OF  "THE  STREET"   .  139 


iv  CONTENTS. 

CHAPTER    IX. 
THE  GREAT  OPERATORS 152 

CHAPTER    X. 
THE  OUTSIDERS 194 

CHAPTER    XI. 

THE  MOBILITY  OF  STOCK 207 

CHAPTER    XII. 
IN  THE  GOLD  ROOM 231 

CHAPTER    XIII. 
THE  GOLD-BROKERS 244 

CHAPTER    XIV. 
THE  MIKING  BOARD 274 

CHAPTER    XV. 

BEFORE  1837  .    286 


CHAPTER    XVI. 

FROM  '37  TO  '60 


CHAPTER    XVII. 
PROSPECTIVE 333 


LIST  OF   ILLUSTRATIONS. 


BULLS  AND  BEARS Frontispiece. 

THE  LONG  ROOM Page  38 

THE  REGULAR  BOARD .119 

BROAD  STREET  FROM  WALL  STREET 142 

THE  GOLD  ROOM    ......  .     231 

THE  GOLD  INDICATOR  .        263 


MEN  AND  MYSTERIES  OF  WALL  STREET. 
CHAPTER    I. 

PRELIMINAEY. 

THE  farthest  reach  of  audacious  speculation  in  our 
day  is  not  without  a  definite  background  of  con- 
servatism. An  age  of  steam  has  stringent  need  of  im- 
mense balance-wheels.  The  sharp  and  fevered  struggle 
for  wealth  has  created  a  necessity  for  secure  investment ; 
and  no  man,  however  gigantic  may  be  the  balances  of 
his  ledgers,  feels  himself  safely  over  the  bridge  of  for- 
tune until  his  assets  assume  the  shape  of- quickly  real- 
izable values.  Hence  the  ease  with  which  national  debts 
are  now  funded  and  joint-stock  enterprises  are  set  on 
foot.  With  an  instantaneous  exchangeable  value  for  all 
kinds  of  property  in  the  world's  market,  and  an  average 
certainty  of  return  to  invested  capital,  mankind  would 
deem  itself  not  far  from  the  threshold  of  the  millen- 
nium. And  it  is  because  civilization  has  as  yet  failed 
to  make  adequate  progress  in  this  direction  with  refer- 
ence to  the  products  of  agriculture  and  machinery,  that 
great  money-marts  have  arisen  and  expanded  into  para- 
mount importance. 

Cotton  is  good,  corn  is  good,  real  estate  is  very  good ; 
but  none  of  these  have  the  beautiful  qualities  of  3  per 


2  MEN   AND   MYSTERIES   OF   WALL   STREET. 

cent  British  consols  or  United  States  5-20s.  Commo- 
dore Vanderbilt  can  convert  the  bulk  of  his  vast  prop- 
erty into  money  in  a  day.  There  is  no  similar  market 
ready  to  perform  a  like  service  for  William  B.  Astor. 
The  Spragues  of  Khode  Island  are  slaves  to  their  fac- 
tories. The  heavy  cattle-raisers  of  Texas,  the  great  far- 
mers of  California  and  Illinois,  the  mill-owners  of  New 
England,  are  not  merely  subject  to  fluctuations  in  the 
prices  of  their  products,  they  are  the  veriest  victims  of 
circumstance  whenever  they  attempt  to  turn  their  prop- 
erty into  coin,  or  the  equivalents  of  coin.  Daniel  Drew, 
the  drover,  had  come  to  comprehend  this  serfdom  very 
thoroughly  before  he  took  up  his  quarters  at  the  Bull 
Head  Tavern  and  mastered  the  subtleties  of  Erie  specu- 
lation. Up  and  down  the  human  gamut  it  is  everywhere 
the  same,  even  to  the  affairs  of  the  most  modest  of  capital- 
ists. The  clergyman  whose  ten  years'  faithful  ministry 
has  resulted  in  the  painful  saving  of  a  thousand  dollars 
is  very  much  at  the  mercy  of  his  parish  if  his  money 
is  in  land,  and  quite  his  own  master  if  it  be  locked  up 
in  bonds  or  shares,  merchantable  at  once  in  the  great 
city  which  lies  an  hour's  distance  from  his  village.  The 
tradesman  in  extremity  is  keenly  aware  of  the  advantage 
of  collaterals  over  mortgage.  Gloucester  fishermen  know 
the  difference  between  sloops  in  the  Bay  of  Fundy  and 
a  package  of  Boston  and  Maine  E.  E.  stock  stowed  away 
in  a  bank- vault. 

ISTor  is  the  proverbial  sensitiveness  of  paper  values 
any  considerable  bar  to  their  popularity.  Over  all  the 
rumor  of  fraud,  of  "  street "  artifices,  of  the  perils  of  open 


PRELIMINARY.  3 

market,  and  of  whirlwind  crises,  is  the  mighty  fact  that 
the  main  bulk  of  securities  in  the  great  stock  boards 
bear  annual  fruitage  in  interest,  and  are  assured  of  in- 
stant sale  at  current  prices.  If  we  glance  across  the 
water  to  the  great  centres  of  finance,  —  London,  Paris, 
Frankfort,  —  we  perceive  what  immense  consequences 
follow  in  the  train  of  this  modern  tendency  for  converti- 
ble investment.  In  those  controlling  money-marts,  the 
major  portion  of  the  assets  of  all  the  large  houses  are  in 
paper  evidences  of  sunken  value.  This  paper,  it  is  true, 
has  a  gold  edge.  The  marginal  annual  worth,  its  inter- 
est-bearing dividend  property,  is  coin.  By  virtue  of 
one  of  the  grandest  outgrowths  of  our  present  civiliza- 
tion,—  that  profound  yet  strangely  misunderstood  in- 
strumentality of  finance,  the  share  market,  —  it  is  indeed 
practically  all  coin  up  to  the  accepted  limit  of  its  selling 
capacity.  The  forms  which  it  assumes  are  manifold.  It 
lies  in  British  consols,  French  Rentes,  in  all  those  weighty 
mortgages  which  nations  in.  sore  strait  have  executed 
over  the  whole  property  of  their  subject  populations  ; 
in  shares,  bonds,  —  those  representatives  of  absorbed 
wealth  which  .have  created  English  railroads,  mines, 
banking-houses,  and  insurance  companies,  Credit  Foncier 
and  Credit  Mobilier,  transtlantic  steam  lines  and  sub- 
atlantic  telegraphic  cables,  placing  the  locomotive  in 
Eussia  and  the  far  East,  and  joining  the  Mediterranean 
and  the  Red  Sea  by  ship-canal.  Curiously, —  or  what,  at 
least,  would  be  curious  if  the  fact  were  not  a  part  of 
education,  —  the  most  desirable  of  these  assets  lack  one 
of  the  main  essentials  of  conversion.  Were  all  the  capi- 


4  MEN   AND   MYSTERIES   OF  WALL   STEEET. 

talists  of  Europe  to  combine  to-day,  they  could  not  com- 
pel England  to  redeem  its  national  debt.  And  in  de- 
gree, a  like  rule  holds  regarding  all  these  securities. 
Interest  in  due  season  is  certain.  The  principal  in  sea- 
son or  out  of  season  is  hard  to  reach.  Nevertheless, 
for  every  purpose  of  life,  this  property  is  available.  It 
has  bought  crowns.  It  has  sustained  governments.  It 
is  a  perennial  flower  of  auriferous  bloom,  whereby  all 
that  is  splendid  or  solid  or  beautiful  in  Europe  is  made 
possible.  The  magnificence  of  courts,  the  glories  of  art, 
the  permanence  of  industries,  the  serenity  of  humble 
firesides,  the  open  hand  of  organized  and  consecrated 
charities,  depend  upon  the  stability  of  these  values. 
In  sum  total  they  can  only  be  estimated  by  billions.  A 
shadowy  frost-blight  on  the  confidence  of  Capital,  a  tre- 
mor of  doubt  affecting  these  investments  in  slight  per 
cent,  is  like  the  sudden  engulfment  of  a  vast  fleet,  home- 
laden  with  specie  to  the  quarter-deck.  It  is  a  lightning 
annihilation  of  definite  wealth,  not  less  terrible  because 
temporary,  comparable  only  to  a  conflagration  wrapping 
some  imperial  city,  or  the  fitful  prostration  of  whole  in- 
dustries. A  most  facile  instrument  of  foreign  exchange, 
the  best  possible  groundwork  for  business  loans,  the 
safest  vehicle  of  testamentary  bequests,  they  have  be- 
come the  stanchest  and  pre-eminent  bulwark  of  com- 
merce. Yet  without  the  interposition  of  the  stock  mar- 
ket, they  would  be  the  most  volatile  of  values.  Those 
startling  variations  in  prices  between  almost  contiguous 
centres  of  trade  which  characterized  all  the  prime  com- 
modities of  life  in  pre-railroad  and  pre-telegraph  days 


PRELIMINARY.  5 

would  equally  appear  in  the  transactions  of  the  kings  of 
finance,  if  they  were  without  the  restraining  influence 
of  mutual  consultation  and  the  test  of  mutual  desire 
afforded  by  the  great  Exchanges.  The  large  economies 
consequent  upon  4he  symmetric  working  of  the  various 
Bourses  and  Stock-Marts  of  Europe  compensate  a  hun- 
dred-fold for  all  excesses  of  speculation.  On  that  inti- 
mate monetary  sympathy  which  the  wide  connections  of 
the  principal  bankers  and  the  agency  of  the  telegraph 
has  brought  about  in  England  and  on  the  Continent,  the 
steadiness  of  the  whole  social  fabric  of  the  Old  World 
may  be  justly  said  to  hinge. 

In  America,  up  to  the  point  when  the  exigencies  of 
civil  war  compelled  to  a  vast  expansion  of  the  national 
debt,  there  was  nothing  that  could  fairly  admit  of  Eu- 
ropean comparison.  We  had  our  pivotal  money-mart. 
We  had  minor  Exchanges  in  certain  important  seaboard 
cities.  In  some  particulars  there  had  been  an  actual  de- 
cline in  the  international  influence  of  these  financial 
centres.  When  Nicholas  Biddle  entered  upon  his  gigan- 
tic scheme  of  making  the  Southern  cotton  yield  the 
basis  of  a  broad  national  credit,  and  our  State  legisla- 
tures had  ventured  into  the  London  market  with  bonds 
as  yet  untarnished  by  the  whisper  of  repudiation,  foreign 
exchange  was  largely  influenced,  and  the  New  York  Stock 
Board  assumed  a  dignity  which  the  crisis  of  1837  could 
not  wholly  efface.  Thereafter,  however,  Wall  Street  con- 
cerned itself  almost  wholly  with  securities  whose  quota-r 
tions  were  limited  to  this  side  the  Atlantic.  The  teu- 
dency  to  become  borrowers  still  inhered  in  the  country.. 


6  MEN  AND  MYSTERIES   OF  WALL   STREET. 

but  the  creditor  class  was  made  up  from,  among  our  own 
citizens.  Municipalities  provided  for  the  wants  of  the 
future,  in  costly  aqueducts,  in  spacious  city-halls,  in 
grand  parks  and  generous  avenues.  States  constructed 
imperial  water-ways,  and  rendered  themselves  debtors  for 
the  assured  education  of  the  young,  for  the  care  of  the 
insane  and  imbecile,  for  the  protection  of  the  law-abid- 
ing from  the  criminal,  and  through  a  proud  solicitude 
for  the  quick  development  of  their  multitudinous  domes- 
tic resources.  The  people  themselves,  conscious  of  the 
splendid  promise  of  the  great  agencies  of  steam  and 
electricity,  supplemented  the  not  wholly  selfish  purposes 
of  capital  by  magnificent  subscriptions  to  railroads,  to 
telegraph  companies,  and  to  every  form  of  industry  which 
avails  itself  of  the  joint-stock  principle. 

The  shares  and  bonds  resulting  from  these  growing 
necessities  of  a  young  and  daring  nation  had  everywhere 
a  local  market,  and  in  large  proportion  were  the  subject 
of  daily  dealing  at  the  New  York  Stock  Exchange.  That 
consciousness  of  the  manifold  uses  of  this  form  of  invest- 
ment which  already  filled  Europe  had  seized  upon  the 
mind  of  every  intelligent  class  in  this  country.  It  was 
a  popular  medium  for  the  employment  of  the  meagre 
savings  of  men  on  salaries,  or  the  week's  earnings  of 
mechanics.  It  was  not  less  the  favorite  with  that  more 
fortunate  portion  who  sought  security  for  surplus  wealth. 
That  current  finance  was  already  deeply  affected  thereby 
was  notably  made  evident  in  the  depressed  days  of  1854 
and  the  subsequent  revulsion  of  1857,  when  the  fact  that 
the  banks  were  more  and  more  in  the  custom  of  lending 


PRELIMINARY.  7 

money  to  brokers  and  merchants  on  security  of  stock 
was  one  of  'the  most  alarming  revelations  of  the  time. 

Ever  and  anon,  also,  in  the  columns  of  the  daily  press 
it  became  apparent  that  these  paper  values  were  the  in- 
strument of  speculative  tactics,  some  of  them  as  old  as 
the  Mississippi  Land  Scheme  and  'Change  Alley,  while 
others,  if  not  of  purely  American  origin,  yet  had  re- 
ceived their  first  definite  nomenclature  in  our  domestic 
share-mart.  A  degree  of  public  interest  attached  to  the 
proceedings.  The  morality  of  the  United  States,  more 
effective,  if  not  more  earnest,  than  in  recent  years, 
launched  forth  invectives  which  carried  force  and  in  par- 
tial ways  affected  public  opinion.  A  stock  operator  was 
regarded  somewhat  as  lottery  dealers  are  at  present.  In 
rural  cities  and  villages  the  summer  visit  of  brokers 
was  an  occasion  of  suspicion.  At  watering-places  solid 
merchants  warned  their  dames  and  daughters  against 
these  ignes  fatui  of  wealth  in  the  same  terms  of  denun- 
ciation which  opulence  assumes  toward  social  adventur- 
ers. And  although  the  great  capitalists  of  the  nation, 
through  whose  agency  railroad  shares,  State  bonds,  and 
other  securities  had  become  marketable,  were  well  aware 
that  in  this  epoch  there  cannot  be  a  great  people  with- 
out a  great  stock  exchange,  and  that,  in  comparison 
with  the  essential  advantage  of  an  open  mart  for  the 
equalization  of  values,  the  chance  profits  of  speculation 
were  as  naught,  they  nevertheless  so  far  acquiesced  in 
the  prevailing  opinion  as  to  seek  to  cloak  their  inter- 
course with  what  was  already  known  as  "the  Street." 
The  great  majority  of  brokers  made  it  their  pride  that 


8  MEN  AND   MYSTERIES   OF  WALL   STREET. 

they  performed  a  purely  commission  business.  However 
much  in  the  secret  ledgers  of  their  offices  the  outward 
assumption  lacked  confirmation,  they  claimed  to  be  high- 
priests  of  the  ideal  in  stock-market  transactions. 

In  the  final  years  of  the  last  decade  a  palpable  change 
began  to  disclose  itself,  both  in  opinion  and  action.  Nice 
distinctions  perceptibly  crumbled.  Eailway  directors 
were  less  chary  of  their  reputations.  Brokers  had  fa- 
miliarized themselves  with  the  idea  that  speculation  was 
a  necessity  of  their  calling.  The  general  public  had  ap- 
parently ceased  to  regard  the  stock  market  as  something 
that  could  be  overthrown  by  sentimental  outbursts, 
and  from  accepting  it  as  a  fixed  fact  there  was  an  evi- 
dently growing  disposition  to  overlook  its  shortcomings 
in  its  larger  usefulness. 

Then  came  the  terrible  apparition  of  war,  with  swift- 
succeeding  consequences.  An  enormous  national  debt 
was  created,  absorbing  more  than  a  billion  and  a  half  of 
dollars.  Large  emissions  of  greenback  currency  took  the 
place  of  gold,  and  by  its  immense  volume  stimulated  pro- 
duction and  gave  the  loyal  sections  of  the  nation  an  aspect 
of  sudden  opulence.  The  earnings  of  all  the  great  share 
companies  were  rapidly  augmented.  Eailroad  stocks  be- 
gan a  succession  of  gigantic  upward  strides  in  the  mar- 
ket, and  through  the  deceptive  appearance  of  increased 
values,  a  pretext  was  afforded  for  a  notable  expansion 
of  paper  capital.  The  mining  corporations,  operating  in 
the  distant  West,  declared  unusual  dividends.  The  gen- 
uine wealth,  foreshadowed  by  the  rich  yield  of  Petroleum 
in  Pennsylvania  and  Western  Virginia,  opened  a  new  ave- 


PEELIMINAKY.  9 

nue  for  investment.  And  the  excitement  naturally  grow- 
ing out  of  the  excessive  demands  upon  reserved  capital  by 
the  vast  varieties  of  new  securities  was  lifted  to  flood- 
tide  by  the  exaggerations  of  speculation  and  the  rumors 
of  millionnaire  fortunes  disappearing  and  reappearing  in 
the  vortex  of  Wall  Street. 

In  one  form  or  another  every  citizen  throughout  the 
country  was  affected  by  the  changed  condition  of  affairs. 
Money  always  has  a  tendency  to  concentrate  itself,  and 
stocks,  bonds,  gold,  rapidly  accumulate  at  those  points 
where  the  most  considerable  financial  activity  prevails. 
The  greater  the  volume  of  floating  wealth,  the  more 
conspicuous  is  this  peculiarity.  It  resulted  from  this 
law  that  New  York  City  became  to  the  United  States 
what  London  is  «to  the  world.  Eminent  before,  this 
chief  metropolis  of  the  seaboard  now  assumed  an  abso- 
lute financial  supremacy.  Its  alternations  of  buoyancy 
and  depression  produced  corresponding  perturbations  in 
every  State,  city,  and  village  in  the  land. 

A  strange  sympathy  exists  between  all  descriptions 
of  paper  securities  under  a  common  monetary  system. 
The  reason  may  not  always  be  apparent,  but  the  fact 
never  ceases  to  be  apparent.  A  fall  in  one  class  may 
lead  to  a  fall  or  rise  in  another  class  ;  there  may  even 
be  a  want  of  congruity  between  the  date  of  the  cause 
and  the  date  of  the  effect ;  but  the  sympathetic  relation 
remains  constant,  however  perplexing  its  developments. 
Potent,  therefore,  through  these  subtle  influences,  over 
even  the  municipal  and  county  bonds,  —  the  shares  and 

manifold  securities  of  remote  and  insignificant  coinmu- 
i*. 


10  MEN   AND   MYSTERIES   OF   WALL   STREET. 

nities,  —  the  paramount  money-mart  exercised  peculiar 
control  over  those  larger  values  with  which  the  share 
market  especially  concerns  itself.  The  holder  of  Gov- 
ernments in  Wisconsin  or  in  Vermont  sought  the  money 
value  of  his  property,  not  on  the  face  of  his  bond,  but  in 
the  telegraph  report  of  Wall  Street  transactions.  Ad- 
ministrators of  estates  gauged  their  worth  by  multiply- 
ing each  budget  of  State  bonds,  or  railway  shares,  by  the 
last  "  quotation  "  from  New  York.  The  Baltimore  mer- 
chant who  had  made  a  shipment  to  Brazil  when  gold 
was  150  saw  his  venture  return  not  only  with  the  fair 
margin  of  commercial  profit,  but  with  the  additional 
gain  incident  to  a  rise  of  specie  to  260.  Country  trad- 
ers found  their  local  banks  perpetually  influenced  by 
the  ease  or  stringency  of  money  in  a  city  perhaps  many 
hundreds  of  miles  distant.  Eetail  city  dealers  averaged 
the  probabilities  of  the  incoming  month  by  the  stock 
barometer,  and  expanded  their  orders  with  the  rise  of 
the  market. 

Moreover,  these  conservative  considerations  were  not 
the  only  ones  that  formed  the  interest  of  Wall  Street. 
Flushed  with  greenbacks,  and  influenced  by  the  vary- 
ing fortunes  of  our  armies,  the  whole  population  of  the 
North  gave  itself  up  to  a  speculative  frenzy.  Brokers 
were  overwhelmed  with  orders.  The  slang  of  the  stock- 
board  found  its  way  to  the  drawing-room.  Everybody 
made  ventures.  Gold  was  the  favorite  with  ladies. 
Clergymen  rather  affected  mining-stock  afid  Petroleum. 
Lawyers  had  a  penchant  for  Erie.  Solid  merchants,  pre- 
ferring their  customary  staples,  sold  cotton  or  corn  for 


PRELIMINARY.  11 

future  delivery,  or  bought  copper  and  salt  on  margins. 
Some  of  the  strange  episodes  of  that  period  may  be 
glanced  at  hereafter,  but  our  present  object  is  rather  to 
indicate  their  existence,  and  to  remark  that  the  conse- 
quences of  that  excitement  are  likely  to  be  permanent. 
The  war,  which  made  us  a  great  people,  made  us  also  a 
nation  in  whom  speculative  ideas  are  predominant.  The 
events  of  ten  years  have  educated  us  into  a  certain 
scientific  appreciation  of  hazards,  into  a  greater  degree 
of  foresight,  into  a  habit  of  action  which  combines 
conservatism  with  an  aptitude  for  risks.  To-day  the 
wires  of  our  telegraph  companies  are  constantly  bur- 
dened with  orders  to  brokers  from  gold  or  stock  oper- 
ators, thickly  scattered  throughout  every  State  in  the 
Union.  Many  of  these  persons  are  large  capitalists ; 
the  majority  are  salaried  men,  small  merchants,  indi- 
viduals who  deem  it  an  averagely  safe  business  to  divert 
their  surplus  to  the  chances  of  the  market.  In  sum 
total,  the  number  is  unquestionably  one  of  high  figures. 
Nor  if  we  take  into  our  reckoning  the  enlarged  propor- 
tions of  the  values  naturally  the  vehicle  of  speculation, 
and  the  inevitable  fluctuations  to  whicli  they  are  sub- 
ject, is  there  any  just  reason  for  anticipating  a  decline 
in  this  tendency  ? 

As  a  matter  of  fact,  that  power  which,  for  lack  of 
a  better  name,  common  usage  denominates  Wall  Street, 
has  become  of  overshadowing  importance.  The  varia- 
tions of  its  share  market  affect  the  whole  volume  of  capi- 
talized indebtedness  the  country  through.  Its  loan  mar- 
ket holds  the  keys  of  trade,  and  invigorates  or  depresses 


12  MEN  AND   MYSTERIES   OF  WALL  STREET. 

all  our  domestic  industries.  Its  daily  sales  of  gold  influ- 
ence our  entire  international  commerce.  Indeed,  if  the 
United  States  holds  steadfastly  to  the  prosperities  of 
peace,  in  three  decades  it  will  be  the  controlling  financial 
force  of  the  world.  At  present,  London,  Frankfort,  Paris, 
retain  a  certain  supremacy,  but  the  element  of  longitude 
is  against  them.  The  New  York  broker  by  high  noon 
knows  the  aspect  of  the  London  stock  market  and  the 
European  Bourses.  He  scans  their  closing  prices,  while 
bids  and  offers  are  still  resounding  through  the  halls  of 
our  home  Exchanges.  Thus  far  the  Cables  serve  only  in 
respect  to  purely  American  securities,  but  the  set  of  for- 
eign speculative  Capital  is  westward,  and  there  is  needed 
nothing  but  the  growth  of  confidence  to  secure  us  the 
enormous  advantage  of  the  active  employment  of  the 
accumulated  wealth  of  England  and  the  Continent. 

To  exhibit  in  all  its  profound  aspects  the  working  of 
our  money  centre,  whether  in  its  international  relations 
or  its  influence  upon  our  multiplex  national  life,  would 
be  an  achievement  of  incalculable  value.  That  no  such 
work  has  yet  appeared  is  doubtless  due  to  the  great  em- 
barrassments of  the  subject.  It  is  needless  to  add  that 
the  present  volume  has  far  humbler  pretensions.  Its 
purpose  is  limited  to  a  very  incomplete  survey  of  some 
of  the  more  obvious  phenomena  of  Wall  Street,  arid 
with  especial  reference  to  its  speculative  transactions. 
What  these  phenomena  are  we  shall  now  "proceed  to 
consider. 


THE   NEW   YORK   STOCK   EXCHANGE.  13 


CHAPTEE  II. 

THE  NEW  YORK  STOCK  EXCHANGE. 

THE  year  1835  was  one  of  high  speculation  in  New 
York.  In  January  the  famous  Morris  Canal  and 
Banking  Company  "corner"  culminated.  The  stock 
jumped  from  almost  nothing  to  185.  In  July  and 
August  Wall  Street  had  so  far  forgotten  the  lesson  that 
64,000  shares  of  Harlem  were  sold  for  future  delivery, 
although  the  whole  capital  stock  was  only  $  7,000.  In- 
cidental to  this  immense  activity  were  corresponding 
"irregularities."  Barfcow,  Cashier  of  the  Commercial 
Bank  of  Albany,  was  a  defaulter  to  the  extent  of 
$130,000.  Wilding,  an  operator  from  London,  disap- 
peared with  $  45,000  worth  of  shares.  Some  of  the  mem- 
bers of  the  State  Legislature  were  involved  in  the  trans- 
actions, and  one  was  expelled  from  the  Senate.  At 
Buffalo,  Benjamin  Eathbun  had  reached  the  climax  of 
his  land  and  house  ventures,  and  was  just  on  the  eve 
of  a  $  3,000,000  failure,  with  half  his  liabilities  in  bills 
bearing  forged  indorsements ! 

Does  any  one  know  how  much  Wall  Street  was  worth 
in  those  days?  It  is  a  hard  question,  —  to  be  solved 
only  by  inferences.  There  was  a  Jew  operator,  for  ex- 
ample, who  made  occasional  bank  deposits  of  $  500,000 
in  a  day,  and  men  spoke  of  it  under  their  breath.  Three 


14  MEN  AND   MYSTERIES   OF  WALL   STREET. 

years  before  a  block  of  a  million  dollars  in  United  States 
funds  had  been  purchased,  and  the  transaction  was  still 
town  talk.  The  Stock  Exchange  itself  was  so  far  un- 
equal to  its  young  ambitions  that  it  twice  refused  to 
enforce  contracts  in  the  case  of  brokers  caught  in  the 
"  corners,"  and  on  a  test  vote,  in  a  week  of  unparalleled 
excitement,  could  only  muster  fifty-two  members. 

The  lapse  of  thirty-five  years  has  certainly  wrought 
changes,  and  the  contrast  is  as  wholesome  as  it  is  remark- 
able. To-day  the  New  York  Stock  Exchange  includes 
in  its  roll-call  over  one  thousand  names.  It  eclipses  all 
other  stock  organizations  in  the  world  for  wealth.  The 
daily  credits  and  deposits  of  brokers  in  city  banks  and 
trust  companies  are  estimated  in  hundreds  of  millions, 
and  the  par  value  of  annual  sales,  made  at  the  boards 
and  "over  the  counter,"  are  computed  as  considerably 
exceeding  $22,000,000,000.  This  notable  increase  in 
financial  importance  has  been  attended  by  correspond- 
ing results.  Speculations,  which,  in  former  times,  swept 
over  the  street  like  a  monsoon,  now  produce  mere  rip- 
ples. Defalcations,  forgeries,  bank  robberies,  disappear 
from  sight  and  thought,  as  the  sea  closes  over  wrecks.  A 
healthy  conservatism  and  a  profound  sense  of  responsi- 
bility lie  at  the  base  of  the  vast  proportion  of  opera- 
tions, and  whatever  may  be  the  vicissitudes  of  individ- 
ual members,  there  is  an  unvarying  enhancement  of 
permanent  collective  wealth. 

The  present  has  another  triumph  over  the  past.  In 
that  veiy  year  1835,  just  ten  days  before  Christmas,  oc- 
curred the  great  conflagration  which  must  ever  remain 


THE  NEW  YOEK   STOCK   EXCHANGE.  15 

one  of  the  dark  memories  of  New  York.  The  Stock 
Board,  then  meeting  at  the  old  Merchants'  Exchange, 
became  suddenly  houseless,  and  from  that  day,  for  thirty 
years,  it  flitted  hither  and  thither  about  the  neighbor- 
hood, now  in  an  attic  over  the  Corn  Exchange  Bank,  and 
again  in  rooms  reached  by  obscure  passage-ways  off 
from  William  Street,  —  always  without  permanent  abid- 
ing-place, and  with  none  of  the  surroundings  essential 
to  give  dignity  and  character  to  such  a  body.  The  en- 
ergy of  a  few  public-spirited  and  far-sighted  members 
has  changed  all  that.  Through  a  building  committee, 
incorporated  under  State  law,  a  fund  was  subscribed,  the 
result  of  which  now  appears  in  the  fine  and  admirably 
ordered  edifice,  standing  on  the  west  side  of  Broad 
Street,  a  few  steps  off  from  Wall.  Perfectly  fire-proof, 
with  a  stately  marble  facade,  free  from  any  of  the  shams 
and  flauntings  of  the  "  American  "  style"  of  architecture, 
a  magnificent  vaulted  basement,  where  property  of  vast 
value  is  held  secure  from  theft  or  flame,  and  with  spa- 
cious halls  furnished  forth  with  all  the  fitting  appoint- 
ments of  an  imperial  business,  the  New  York  Stock 
Exchange  is  one  of  the  most  substantial  and  note- 
worthy structures  in  the  metropolis. 

Before  entering  the  spacious  Broad  Street  portal  and 
surveying  the  interior,  it  is  highly  essential  that  the 
organization  of  the  Board  and  the  salient  features  of  its 
daily  routine  should  be  thoroughly  comprehended.  On 
the  29th  of  July,  1869,  the  consolidation  of  the  Govern- 
ment and  the  Open  Boards  with  the  old'  historic  Stock 
Exchange,  which  had  been  provisionally  completed  for 


16  MEN  AND   MYSTEKIES   OF  WALL   STREET. 

the  space  of  two  months,  received  its  final  confirmation 
by  the  passage  of  a  revised  Constitution  and  By-Laws. 
This  new  organic  law  is  marked  by  a  conservatism  that 
cannot  fail  to  impart  a  character  and  strength  to  the 
Association,  such  as  its  high  representative  position 
demands.     As  before,  there  is  a  President,  whose  office 
is  mainly  perfunctory,  and  there  is  a  Treasurer  of  semi- 
annual importance ;  there  are  two  Vice-Presidents,  a 
Secretary  with  his  Assistant,  and  the  Boll-Keeper, — 
all  intrusted  with  the  duties  naturally  incumbent  upon 
similar  officers  in  every  organization  of  men,  and  with 
the  special  and  extremely  arduous  work  incident  to  the 
daily  sessions ;  but  the  real  Executive  control  now  rests 
with  a  Governing  Committee,  consisting  of  forty  mem- 
bers, selected  from  the  whole  body,  together  with  the 
President,  Secretary,  and  Treasurer,  in  their  unofficial 
capacity.     All  duties  of  administration,  of  legislation, 
of    police,   devolve   upon    this    imperium   in   imperio. 
Divided  into   classes   of  ten,  one   of  which  goes  out 
each  year,  the  Committee,  like  its  associate  officers,  is 
subject,  in  a  certain  degree,  to  the  will  of  its  constitu- 
ency.    But  beyond  its  right  of  election  at  the  annual 
meeting,  the  Board  is  nearly  powerless.     The  Governing 
Committee  may  make  or  unmake,  suspend,  expel,  re- 
admit.   It  may  even  alter  the  entire  letter  of  the  Con- 
stitution or  By-Laws,  and  unless  two  thirds  of  all  the 
members  of  the  Association  disapprove  thereof  within 
one  week,  the  changes  become  final  law.     So  full  an 
attendance  of  the  Board  as  is  required  by  this  rule  is 
almost  unexampled,  and  the  Committee  is,  therefore, 


THE  NEW  YORK  STOCK  EXCHANGE.  17 

practically  as  autocratic  as  the  Venetian  Council  of  ten. 
It  is  scarcely  possible  to  overrate  the  excellence  of  this 
revolution,  which  has  transferred  the  essential  power 
from  that  impulsive,  volatile,  centrifugal  aggregate  of 
forces  which  meets  daily  "  round  the  table,"  to  a  select 
and  authoritative  body,  who  combine  with  a  great  ex- 
perience the  sense  of  a  great  responsibility. 

This  Governing  Committee,  in  reference  to  its  varied 
functions,  consists  of  seven  subdivisions,  whose  duties 
correspond  to  the  distinct  objects  for  which  the  Associa- 
tion was  created.  The  most  vital  of  these  objects  are :  — 

First,  the  rigid  scrutiny  of  all  securities  liable  to  be 
dealt  in  by  the  Exchange. 

Second,  a  proper  surveillance  over  members  in  respect 
to  their  fidelity  to  contracts,  and  a  stringent  examination 
of  the  good  character  and  responsibility  of  candidates 
for  membership. 

Third,  a  systematization  of  the  whole  business  of 
brokerage,  so  far  as  it  relates  to  the  intercourse  of  mem- 
ber with  member. 

No  stock,  bond,  or  other  security  can  be  dealt  in  by 
the  Board,  unless  all  the  financial  conditions,  capital, 
number  of  shares,  resources,  etc.,  have  been  searchingly 
examined.  As  an  additional  safeguard,  the  Exchange 
binds  itself  to  exclude  any  active  speculative  stock  of 
any  company  which  fails  to  keep  a  registry  of  shares  in 
some  responsible  Trust  Company,  Bank,  or  kindred 
agency,  and  to  give  due  public  notice  of  every  intention 
to  increase  its  capital,  either  through  the  conversion  of 
bonds  or  by  direct  issue,  with  the  grounds  for  such  in- 


18  MEN   AND   MYSTEEIES   OF  WALL   STREET.      • 

crease.  This  exceedingly  conservative  provision  owes 
its  origin  to  the  stock-jobbing  improprieties  of  the 
directors  of  the  Erie  and  other  railway  companies,  whose 
manoeuvres  during  the  past  decade  have  brought  more 
discredit  upon  Wall  Street  operations  than  all  other 
causes  combined. 

The  rules  for  the  admission  of  members,  and  for  the 
government  of  those  already  enrolled  in  the  organization, 
are  necessarily  very  strict.  In  an  arena  where  a  mere 
nod  may  seal  a  contract  involving  hundreds  of  thou- 
sands, and  a  whisper  is  as  binding  as  the  longest  and 
most  cunningly  phrased  agreement  of  all  the  lawyers, 
men  must  have  keen  heads,  vast  experience,  spotless 
business  reputation.  Every  debt,  every  offer  made  and 
accepted,  must  be  rigidly  fulfilled.  A  member  who  fails 
must  notify  the  President  at  once  ;  he,  in  turn,  announces 
it  to  the  Board ;  the  Secretary  records  the  name  on  the 
fatal  list ;  the  stock  which  has  occasioned  the  default  is 
sold  or  bought  in  open  market  under  the  rule ;  and  the 
broker  loses  every  privilege  of  the  Exchange  until  his 
creditors  are  satisfied,  and  the  Governing  Committee 
consents  to  his  reinstatement.  The  reader  has  only  to 
consult  the  Constitution  to  discover  how  carefully  the 
Exchange  has  guarded  itself  against  the  hazards  of  fail- 
ure, compelling  "  weak  "  members  to  supplement  their 
contracts  by  heavy  money  deposit,  punishing  fraud  by 
-expulsion,  rendering  suspension  a  severe  penalty  by  its 
network  of  rules  framed  out  of  extreme  solicitude  for 
the  rights  of  the  creditor.  Not  less  exacting  are  the  pro- 
visions for  new  membership.  Brokers'  clerks,  —  repre- 


THE   NEW   YORK   STOCK   EXCHANGE.  19 

senting  that  alert,  quick-witted,  sure-footed  class,  which 
has  grown  up  under  the  rough  tuition  of  the  street, 
knows  its  laws,  comprehends  the  abiding  sacredness  of 
its  verbal  contracts,  —  find  the  doors  of  admission  open 
much  more  readily  than  do  men  whose  experience  is 
limited  to  two  or  three  years  as  capitalist  brokers  or 
bankers.  The  latter,  indeed,  must  show  a  very  clean 
record,  and  submit  to  a  scrutiny  in  its  very  nature  ex- 
tremely irksome.  In  former  years  the  black-ball  played 
an  efficient  part  in  winnowing  out  candidates,  and  the 
new  regimen,  although  probably  more  free  from  the 
influences  of  personal  dislike,  is  likely  in  other  ways  to 
be  not  less  exacting. 

That  portion  of  the  government  which  concerns  itself 
with  the  terms  of  each  several  class  of  contracts,  and  the 
regular  order  of  business,  can,  in  many  respects,  be  more 
properly  explained  hereafter.  It  is  a  curious  blending 
of  law  and  usage,  the  latter  being  enforced  as  strictly  as 
the  former,  although  finding  no  place  in  the  By-Laws. 
There  is  one  point,  however,  demanding  particular  con- 
sideration. In  all  the  great  European  share-marts  there 
is  a  general  executive  organization  differing  only  in  local 
details  from  that  by  which  the  New  York  Exchange  is 
regulated.  But  the  functions  of  the  officers  cease  at  the 
moment  when  the  real  business  of  a  stock-market  begins. 
The  syndic  of  the  Paris  Bourse,  it  is  true,  presides  over 
the  daily  sessions  ;  but  his  duties  are  wholly  subordinate, 
and  the  agens  de  change  in  the  Corbeille —  that  basket- 
like  chamber  where  the  parquet  assembles  —  direct  the 
market  quite  at  their  pleasure.  In  the  London  Stock 


20  MEN   AND   MYSTERIES   OF  WALL   STREET. 

Exchange  even  this  semblance  of  authority  is  wanting. 
The  daily  meetings  are  simply  the  confluence  of  a  mob, 
in  which  everybody  bargains  with  everybody,  in  which 
there  is  no  order,  nor  system,  nor  record  of  transac- 
tions. 

The  New  York  Stock  Exchange,  in  this  regard,  has 
a  completeness  to  be  found  in  no  similar  transatlantic 
organization.  The  securities  dealt  in  by  the  Board  are 
divided  into  two  classes,  known  respectively  as  the 
Regular  and  the  Free  List.  No  bond  or  stock  can 
be  or  has  been  enrolled  in  either  of  these  classes  with- 
out due  scrutiny  in  committee,  and  the  ground  of  sep- 
aration is  simple:  The  Regular  List  must  be  called  in 
sequence  by  the  Vice-President  in  the  chair :  the  Free 
List  may  or  may  not  be  called  at  the  option  of  mem- 
bers. Of  course,  the  former  is  the  important  class, 
and  includes  some  two  hundred  and  seventy-eight  dis- 
tinct securities,  comprising  all  the  great  railway  shares 
and  bonds,  State  and  city  securities,  bank-stock,  and  a 
curious  melange  of  express,  telegraph,  mining  shares, 
etc.,  which  is  enumerated  as  "miscellaneous." 

Every  day,  at  half  past  ten  in  the  morning,  the  First 
Vice-President  ascends  the  rostrum,  in  the  official 
chamber  of  the  Stock  Exchange,  and  goes  through 
with  the  selected  list  in  the  subjoined  sequence:  — 

FIRST.  —  Miscellaneous  Stocks. 

SECOND.  — Railroad  Stocks. 

THIRD.  —  State  Bonds. 

FOURTH.  —  City  Stocks. 

FIFTH.  —  Railroad  Bonds. 


THE   NEW  YORK   STOCK  EXCHANGE.  21 

The  assembled  "brokers,  with  their  budget  of  orders, 
wait  expectant ;  and  the  instant  a  stock  is  reached  that 
is  in  their  day's  book,  they  spring  into  the  arena  with  a 
bid  or  an  offer.  When  a  "  speculative  "  or  favorite  stock 
is  called,  the  excitement  deepens,  and  the  air  is  rent 
with  rival  cries.  The  presiding  officer  repeats  the  trans- 
actions to  the  Assistant  Secretary  at  his  side,  who  at 
once  records  them,  while  the  "marker"  or  black-board 
clerk  writes  off  the  prices  upon  the  tablet  at  the  head  of 
the  room.  Where  there  is  a  doubt  regarding  buyer  or 
seller,  the  Vice-President  decides,  subject  to  immediate 
appeal  in  case  of  dissatisfaction ;  such  brokers  as  wit- 
nessed the  transaction  voting  and  generally  upholding 
the  Chair. 

As  soon  as  the  Eegular  Call  is  completed,  the  Free 
List  is  in  order,  and  the  Vice-President  repeats  the 
name  of  such  stocks  as  the  members  may  select  for 
dealings,  the  Assistant  Secretary  recording  every  bid 
and  the  accompanying  details.  After  this  the  session 
closes,  unless  the  members  in  attendance  wish  to  call  up 
anew  particular  stocks  on  the  Eegular  List;  this  pro- 
vision allowing  of  dealings  in  those  securities  which 
were  slurred  over  in  the  routine  morning  call. 

At  one  o'clock  the  afternoon  session  is  held,  over 
which  the  Second  Vice-President  usually  presides.  The 
usages  of  the  Morning  Board  apply  here  as  well.  The 
Vice-President  holds  the  market  in  his  hands,  directs  all 
movements,  announces  each  transaction,  and  arbitrates 
in  all  disputes.  The  Assistant  Secretary  also  renews  his 
record  of  all  biddings,  and  in  his  book,  at  the  close,  the 
whole  historv  of  the  dav's  work  arrears. 


22  MEN  AND   MYSTERIES   OF  WALL   STREET. 

Fifteen  minutes  before  the  first  meeting  at  the  Regu- 
lar Board,  the  Government  Board  begins  its  sessions  in 
an  adjoining  chamber.  The  same  routine  is  observed:  a 
Vice-President  directs  the  market ;  an  Assistant  Secre- 
tary notes  down  against  each  class  of  national  securities, 
as  it  passes  the  gantlet  of  the  brokers,  the  prices  offered 
and  demanded,  and  every  important  feature  of  a  transac- 
tion in  case  of  positive  sale.  Were  the  stock-dealings 
of  Wall  Street  limited  to  these  two  rooms,  an  efficient 
safeguard  would  exist  against  some  of  the  most  perilous 
phases  of  speculation.  But  it  has  happened,  partly  on 
account  of  the  great  volume  of  daily  business,  partly 
from  a  desire  to  avoid,  for  speculative  reasons,  this  very 
registry,  that  a  chamber  is  provided  at  the  Exchange, 
where  members  may  bargain  with  members  at  any  hour 
throughout  the  day.  This  is  known  as  the  Long  Room. 
Practically,  then,  the  daily  routine  of  brokers  at  the 
Boards  might  be  classified,  as  follows :  — 

Government  Securities.      All  other  Securities,  Shares,  Bonds,  etc. 

Government  Board.  Regular  Board. 

Sessions  10|,  12|,  2J.  Sessions  10£  A.  M. ;  1  P.  M. 


Every  class  of  Speculative  Stock  on  any  list  of  the 
Stock  Exchange. 

Long  Room. 

Sessions  Continuous,  from  the  moment  brokers  come  down  in  the 
morning,  till  night  arrives  to  relieve  them. 

It  is  apparent,  from  what  precedes,  that  the  really  im- 
portant officers  of  the  Stock  Exchange  are  those  in  active 


THE  NEW  YORK   STOCK  EXCHANGE.  23 

duties  at  the  daily  sessions.  The  Vice-Presidents  per- 
form all  the  work  which  is  not  ornamental,  with  the 
Secretary  and  his  Assistant  as  active  coadjutors.  Next 
in  usefulness  is  the  Eoll- Keeper.  He  records  the  fines, 
and  no  body  of  men  are  to  all  appearance  more  fond  "of 
breaking  over  minor  rules,  and  promptly  meeting  the 
penalty,  than  New  York  stockbrokers.  The  annual  dues 
of  the  Exchange  are  only  fifty  dollars,  but  the  fines  of 
individual  members  not  seldom  mount  up  to  nearly  ten 
times  that  sum.  Any  interruption  of  the  presiding  offi- 
cer while  calling  stocks  renders  a  broker  liable  to  a 
penalty,  "not  less  than  twenty-five  cents"  for  each 
offence.  To  smoke  a  cigar  within  the  Exchange  costs 
five  dollars.  Non-attendance  at  special  meetings  sub- 
jects one  to  a  fine  of  anything  under  five  dollars.  A 
broker  cannot  stand  on  a  table  or  chair  without  paying 
a  dollar  ;  or  innocently  fling  a  "  paper  dart  "  at  a  neigh- 
bor without  being  amerced  ten  dollars.  It  costs  twelve 
and  a  half  cents- to  call  up  a.  stock  not  on  the  Regular 
List,  and  all  the  way  from  one  to  five  dollars  to  do  any- 
thing not  enumerated  in  these  offences  which  may  be 
deemed  indecorous  by  the  Presiding  Officer. 

Besides  the  register  of  fines,  there  is  another  officer 
whose  name  has  no  place  in  the  publications  of  the 
Board,  but  whose  services  are  perpetually  called  into 
requisition  by  almost  every  member,  and  whose  pres- 
ence is  an  inevitable  and  formidable  apparition  to  a 
chance  visitor  at  the  Exchange.  Concerning  his  rdle 
we  shall  presently  have  occasion  to  speak  somewhat 
fully,  for  the  now  sufficiently  instructed  reader  will 


-      :  - 

ek 
—    __    L_      : 


A  DAY  AT   THE   BOARDS.  25 


CHAPTEE  III. 

A  DAY  AT  THE  BOARDS. 

THE  first  impression  on  entering  the  Stock  Exchange 
is  upon  the  tympanum.  A  genuine  tourist  almost 
inevitably  has  a  dreamy  reminiscence  of  Niagara.  The 
visitor  finds  himself  in  the  vestibule  of  a  vast  chamber, 
which  stretches  a  furlong  deep  from  Broad  to  New 
Street.  At  the  farther  end,  shut  off  by  successive  iron 
barriers  with  narrow  gateways  under  watch  and  ward, 
is  a  huge  basin-like  enclosure,  filled  with  wild  human 
tumult.  Peering  down  through  the  high-vaulted,  dim- 
lighted  space,  the  eye  sees  nothing  but  excited  faces, 
arms  flung  wildly  in  air,  heads  appearing  and  disappear- 
ing, —  a  billowy  mob,  from  which  surges  up  an  incessant 
and  confused  clamor.  The  straining  ear  distinguishes 
evfer  and  anon  an  individual  voice  rising  in  shriller  pitch 
or  heavier  volume,  only  to  be  drowned  by  fifty  other  cries 
booming  and  echoing  out  from  the  abyss.  Tliis  chaos 
of  plunging  sound  and  deafening  roar  is  the  Long  Room. 
To  comprehend  it,  one  must  approach  nearer.  Pre- 
vious to  such  visit,  however,  a  stranger  should  instruct 
himself  by  mounting  the  staircase  at  the  left  and  study- 
ing the  more  orderly  proceedings  of  the  regular  sessions. 
Just  at  the  head  of  the  stairway  are  the  private  and 
public  approaches  to  the  Eegular  Board.  At  ten  in  the 


26  MEN  AND   MYSTERIES   OF  WALL   STREET. 


morning  we  can  take  a  leisurely  survey  of  the  architec 
tural  peculiarities  of  the  room.  Opening  the  nearer  doo 
we  suddenly  confront  the  mild-mannered  Cerberus  o 
the  Stock  Exchange.  The  reader  has  already  been  fon 
warned  of  this  unescapable  phenomenon.  His  duty 
to  challenge  every  stray-comer.  Properly  introduce 
by  officers  or  members,  you  can  pass.  Without  the* 
credentials,  there  is  no  ingress.  His  guards  are  statione 
at  every  doorway.  They  rise  up  before  you  at  all  tl 
avenues  to  the  Long  Room.  They  stand  athwart  tl 
threshold  of  the  Government  Board.  One  might  as  we 
attempt  to  visit  the  Kabla  at  Mecca  without  swearing  I 
the  Prophet,  as  to  enter  the  sacred  arena  of  the  brol 
ers,  when  lacking  satisfactory  introduction.  Besides  h 
sterner  function,  "  Peter,"  the  door-keeper,  acts  as  a  so 
of  general  factotum.  When  telegraphic  messages  a 
rive  for  brokers  inside,  he  shouts  the  name  with  a  res< 
nant  voice  rolling  high  above  the  clangor  of  the  stoc 
market.  In  fact,  with  his  leash  of  page-boys  who  assi 
him  in  distributing  the  incoming  telegrams,  he  is  one  c 
the  most  remarkable  institutions  of  the  room.  Sixte'e 
years  at  his  post,  he  has  grown  into  his  place,  and  tl 
broker  guild  could  no  more  do  without  him  than  the 
could  speak  of  him  other  than  by 'his  Christian-nam 
Showing  our  permit  with  the  authentic  signature  c 
President  Neilson,  Peter  nods  his  head  graciously,  ar 
we  walk  forward.  We  are  now  in  a  hall  some  sevenl 
feet  long  and  fifty  broad.  The  lofty  walls  are  lined  wil 
heavy  green  damask.  At  the  base  of  the  room,  and  rui 
ning  round  the  most  of  two  sides,  is  an  iron  railing  to 


A   DAY   AT   THE   BOARDS.  27 

hind  which  there  is  ample  accommodation  for  that  mot- 
ley throng  which  daily  gathers  in  the  strangers'  gallery. 
Within  this  enclosing  balustrade,  in  the  space  reserved 
to  brokers,  the  floor  slopes  gradually  toward  us  in  terrace 
after  terrace  of  arm-chairs,  until  it  reaches  the  interspace 
in  front ;  then  it  falls  sharply  right  and  left  into  a  series 
of  semicircular  steps  leading  to  a  hollow  in  the  middle, 
where  stands  an  elongated  taBle  at  right  angles  to  the 
official  rostrum.  This  is  the  point  where  the  excite- 
ment of  the  Board  fuses  to  white  heat,  the  central 
centre,  the  maelstrom,  the  mid  arena  of  the  combat. 
Above  is  the  platform  of  the  officers,  with  the  Presi- 
dent's pulpit-like  elevation  flanked  on  the  left  by  desks 
for  three  secretaries,  on  the  right  by  that  of  the  Roll- 
Keeper.  Two  black  tablets  on  either  side  against  the 
wall  slide  up  through  easy  grooves,  at  the  will  of  the 
recording  clerk.  On  these  the  prices  of  the  more  active 
stocks  are  marked  off  as  rapidly  as  made.  At  the  ex- 
treme west  corner  is  a  telegraph  key-board,  and  on  the 
east  the  gold  indicator.  Installed  in  gilded  frames,  the 
keen  faces  of  old  John  Ward  and  Jacob  Little  overlook 
the  transactions  of  a  generation  whose  daily  dealings 
eclipse  those  of  these  giant  veterans  in  a  lifetime. 

All  the  time  that  we  have  been  glancing  about  us 
the  floor  has  been  filling  up.  Some  twenty  or  thirty 
members  are  standing  round  the  table,  others  are  chat- 
ting idly  among  the  arm-chairs.  Peter  watches  at  the 
entrance  with  four  or  five  page-boys  around  him.  The 
blackboard  clerk  is  looking  over  his  crayons.  Shrewd- 
eyed,  wide-awake  Secretary  Broadhead  has  just  seated 


28  MEN  AND   MYSTERIES   OF  WALL   STKEET. 

himself  in  his  throne-like  chair,  and  is  already  sur- 
rounded by  half  a  dozen  brokers.  The  Roll-Keeper  ia 
opening  his  book,  and  the  Assistant  Secretary  is  adjust- 
ing himself  to  his  desk.  Lithe,  light -haired,  pleasant- 
faced  Vice-President  Wheelock,  who  has  borne  the 
honors  and  ardor  of  office  full  thirteen  years,  every  May- 
day more  alert  and  popular,  bends  over  his  stock-jobbing 
pulpit,  and  sharp  at  the  "half-hour  calls  the  Board  tc 
order.  As  there  was  no  official  business  at  yesterday's 
session,  there  are  no  minutes  to  be  read,  and  the  daj 
starts  abruptly  with  the  Eegular  list. 

V.  P.     "  Delaware  and  Hudson  Canal.     Any  bids  ? " 

As  no  broker  makes  an  offer,  the  mallet  rings  dowr 
upon  the  desk,  and  the  call  proceeds  :  — 

"Pennsylvania  Coal,  Central  Coal,  Cumberland  Coal 
American  Coal,  Spring  Mountain  Coal,  Canton  Company 
Western  Union  Telegraph  —  " 

Voice.  "  I  '11  give  '5  for  a  hundred,  —  '5  for  a  hun- 
dred, —  '5  for  a  hundred." 

Other  Voices.  "A  hundred  at  f."  "Five  hundred 
at  a  |."  "Any  part  of  five  hundred  at  a  £." 

First  Voice.     "  I  11  take  a  hundred." 

V.  P.  "At  5£.  A  hundred  at  5|.  Any  bids?" 
Rap.  Rap.  "That  will  do  for  that  stock.  —  Quick- 
silver." 

Robust  Bidder.  "  12  for  a  hundred," "  12," 

"12£,"  —  "13,"  —  "14"  — 

Voice.     "  Sold." 

Simultaneous  Second  Voice.     "  I  take  that  stock." 

V.  P.     "  One  hundred  to  Snow  at  14." 


A  DAY  AT   THE  BOARDS.  29 

Second  Voice.     "  I  claim  that  lot,  Mr.  President." 

V.  P.  "  The  Chair  decides  that  Snow  made  the  pur- 
chase." 

Second  Voice.     "  I  appeal." 

V.  P.     "  Is  the  appeal  seconded  ? " 

Fresh  Voices.  "Second  the  motion."  —  "Second  the 
appeal." 

The  Vice-President  brings'  the  question  before  the 
Board,  and  Broker  No.  2  has  but  three  votes  to  show 
for  it. 

V.  P.  "The  Chair  is  sustained.  Go  on  with  the 
stock.  Mariposa.  Any  bids  ?  —  Pacific  Mail." 

And  so  the  mill  grinds  on.  Mgh  a  billion  and  a  half 
of  bonds  and  shares  will  be  flung  into  the  swaying 
crowd,  before  the  list  is  ended.  Old  prices  disappear; 
new  prices  come  forth,  and  the  click  of  the  telegraph  is 
already  helping  the  financial  world  to  go  over  its  ledgers 
anew,  and  record  the  shrinkage  of  a  hundred  million 
dollars,  or  twice  that  sum  of  fresh  new  wealth  born  of  a 
buoyant  market,  and  destined  perchance  to  untimely 
death  before  the  sun  has  swept  twenty-four  hours  far- 
ther through  the  eternities. 

As  the  moment  for  the  call  of  Eailroads  approaches, 
the  chamber  assumes  a  vast  access  of  life.  A  fresh 
stream  of  brokers  pours-  through  the  private  passage, 
and  eddies  round  the  President's  desk,  or  swirls  off  to- 
ward the  base  of  the  room,  where  eager  crowds  are  dis- 
cussing the  terms  of  loans,  or  are  improvising  private 
markets  for  the  various  shares.  Behind  the  public 
railing  a  motley  throng  has  gathered,  —  the  curious  or 


30  MEN  AND   MYSTERIES   OF  WALL   STREET. 

the  anxious,  small  speculators,  merchants  from  the  coun- 
try down  town  to  see  the  sights,  all  sorts  of  persons  from 
all  sorts  of  places,  by  dozens  on  quiet  days,  in  shoals 
of  hundreds  on  hundreds  when  the  rumor  of  a  great 
speculative  campaign  is  abroad.  Through  this  dense 
aggregate  of  inquisitiveness,  intermittent  messenger- 
boys  twist  in  and  out,  carrying  hurried  whispers  back 
to  offices,  or  dashing  forward  with  emergent  orders  for 
brokers  whose  names  are  shouted  by  the  page-boys  in 
shrillest  treble. 

The  roar  from  the  cock-pit  rolls  up  denser  and  denser. 
The  President  plies  his  gavel,  the  Assistant  Secretaries 
scratch  across  the  paper,  registering  bids  and  offers  as  for 
dear  life.  The  black  tablet  slides  up  second  by  second 
with  ever-fresh  figures  evolved  from  the  chaos  below. 
Every  tongue  in  every  head  of  all  this  multiform  con- 
course of  excited  or  expectant  humanity  billowing  hither 
and  thither  between  the  walls,  is  adding  its  contribution 
to  the  general  bedlam.  The  keenest  weather-beaten 
operator  of  all  that  outside  world  in  the  gallery  vainly 
strives  to  follow  the  biddings  of  the  voices  "  round  the 
table,"  —  those  voices  of  destiny,  which  he  wishes  most 
to  hear,  torn  in  a  hundred  tattered  shreds  of  sound 
by  the  intervening  shoutings,  shrieks,  and  sibillations. 
Peter,  now  overworked  by  ever-fresh  arrivals  of  tele- 
grams and  orders,  bellows  out  "Smith,"  "Jones," 
"Robinson,"  in  interminable  succession,, the  names  ex- 
ploding in  mid  air  with  the  crash  of  a  forty-pounder. 
Failing  of  response,  Peter  discharges  his  pages  like  a 
sheaf  of  rockets  into  the  tumult,  and  "Jones,  JONES, 


A   DAY  AT   THE   BOAEDS.  31 

Jones,  Smith,  JONES,"  mingle  with  "Buyer  30,"  "A 
half,"  "  Seven  eighths,"  "  Cash/'  the  tara-ta-ta-tat  of  the 
auction  hammer,  and  whatever  else  aids  the  confusion. 

Suddenly  the  Chair  shouts,  "  New  York  Central." 

At  this  word  a  thrill  of  excitement  permeates  the 
room.  A  whirl  as  of  a  tempest  carries  every  broker  to 
the  great  interspace  in  front.  The  table  has  momen- 
tarily disappeared  from  sight.  In  its  place  is  a  tide  of 
swaying  hands  and  faces.  The  rattle  of  the  President's 
hammer  is  like  the  falling  of  a  pin  in  the  immense  con- 
fluence of  shoutings.  "  I  '11  sell  five  hundred  at  95." 
No  bid  !  "  At  4|,  buyer  10."  "  Take  'em."  "  Five  hun- 
dred more."  No  bid !  "  Five  hundred  at  4."  "  Five 
hundred  at  3,  seller  30."  "At  2,  cash."  "Any  part 
of  a  thousand  at  90."  This  last  offer  is  as  a  huge 
stone  flung  into  a  geyser.  A  silence  born  of  astonish- 
ment and  dismay  fills  the  multitude,  followed  by  the 
plunging  roar  of  a  hundred  voices. 

Up  in  the  eastern  corner  a  grave-faced  man  has  his 
fingers  on  the  key-board,  and  is  spreading  the  news  of 
this  fierce  "  bear "  raid,  by  which  Central  has  been  ham- 
mered down  five  per  cent,  through  four  hundred  bankers' 
and  brokers'  offices. 

Down  in  the  cock-pit  the  Commodore's  "  pups,"  as  the 
merciless,  cacophonic  "  street "  argot  denominates  the 
broker  friends  of  Vanderbilt,  are  making  an  ineffective 
rally.  They  have  carried  up  Central  to  91,  1|,  l\,  1£, 
when  the  load  proves  too  heavy,  and  the  sliding  down- 
ward scale  begins,  and  again  Ursa  Major's  voice  sounds 
out  like  a  bassoon,  —  "  At  90,  buyer  3  or  30  ;  any  part 
of  five  thousand." 


32      MEN  AND  MYSTEEIES  OF  WALL  STEEET. 

V.  P.  "  Any  part  of  five  thousand  is  offered  at  90, 
buyer  3  or  30,  —  what 's  bid  ? "  The  hammer  is  poised 
for  the  fall  which  will  clench  Central  at  90.  Just  on 
the  second,  however,  a  little  wiry  man,  who  has  been 
wriggling  through  the  contending  gladiators  with  a 
crumpled  bit  of  paper  in  his  tightening  hand,  screams 
out  in  the  face  of  the  king  bear :  "  I  '11  take  your  lot, 
and  five  thousand  more.  91  for  a  thousand,  —  '2  for 
five  thousand,  —  '3  for  any  part  of  five  thousand."  A 
fusillade  of  voices  follows  the  leader  cry.  The  ear 
catches  "  3£,"  —  "  £,"  —  "  4,"  —  "  5."  "  Take  'em." 
"  Sold."  "  Two  hundred  more."  "  Sold."  "  A  hundred 
more."  No  response.  Down  goes  the  gavel,  and  Cen- 
tral closes  firm  at  95.  Hudson  succeeds  and  Harlem 
after,  the  bulls  now  jubilant  and  holding  the  market. 
While  the  battle  goes  on  in  the  cock-pit,  a  whisper 
spreads  that  the  money-market  is  active  and  loans  have 
risen  to  seven  per  cent,  and  £,  £,  or  f  commission. 

V.  P.    "  Northwestern.    What 's  bid  ? " 

A  voice  like  a  sledge-hammer.  —  "A  hundred  at  f, 
five  hundred  at  f,  any  part  of  a  thousand  at  J." 

Half  a  dozen  brokers.  —  "  Give  you  \  for  a  hundred." 
"  f  for  five  hundred  ! "  "  f  for  a  hundred  !  " 

First  Voice.  "  Sold.  Five  hundred  more.  Five  hun- 
dred at  f ;  five  hundred  at  £.  A  hundred  at  an  £ ;  a 
hundred  at  '4.  Help  yourselves,  boys,  at  '3f,  regular 
or  buyer  3." 

The  market  trembles.  The  bulls  hesitate.  The  tight- 
ening money-market  is  doing  its  work.  Other  bears 
fling  themselves  into  the  me'lfa  Northwestern  plunges 


A   DAY   AT   THE   BOARDS.  33 

downward.  Twenty  hands  are  snapping  out  whole  vol- 
leys of  descending  bids,  —  "  Two  hundred  at  '4."  "  Two 
hundred  .at  '3f."  "Take  'em,"  cries  a  bull,  struggling  to 
hold  the  market.  "  Five  hundred  more  at  £."  "  A  hun- 
dred at  f ."  "  I  '11  give  £  for  a  hundred  ! "  "  Sold."  "  Five 
hundred  more."  "  Five  hundred  at  |."  "  Take  'em  at  a  \." 
A  sudde^i  lull  at  this  last  bid.  The  Vice-President  seizes 
his  opportunity.  "  That  will  do  for  that  stock.  No  more 
offered.  The  stock  "  (turning  to  the  "  marker  ")  "  closes 
at  851 -f." 

"  Eock  Island,  gentlemen  ! " 

And  so  on  and  on,  pausing  for  five  minutes  over  some 
speculative  stock  or  a  new  State  bond,  and  racing  for- 
ward at  the  rate  of  ten,  twenty,  or  even  twice  that  num- 
ber in  the  same  space,  when  the  securities  belong  to  the 
investment  class.  The  Eegular  Call  completed,  the  Free 
List  is  in  order,  and  the  President  brings  forward  such 
stocks  as  the  brokers  present  wish  to  deal  in.  Possibly 
the  stock  of  some  wild-cat  oil  company  may  be  named, 
and  a  member,  anxious  to  appreciate  its  value,  will  bid 
"15  for  a  hundred,  —  20  for  a  hundred,  —  25  for  a  hun- 
dred." Other  brokers  in  irony  shout :  "  A  hundred  at 
'5|."  "  Five  hundred  at  |."  The  Vice-President  cries, 
"  Any  more  bids  ?  Oilville  Scrip.  25  bid."  Up  go  all  the 
hats,  and  the  Board  breaks  out  in  a  round  of  admiring 
cheers.  Still  more  stocks,  new  bids  and  offers,  now  a 
light  pattering,  and  anon  a  driving  storm  of  cries. 

Suddenly  a  Secretary  mounts  the  rostrum.  A  silence 
as  of  the  tomb  overspreads  the  chamber.  Every  hat  is 
lifted  decorously  from  head.  The  death  of  a  member 
2*  c 


34  MEN  AND   MYSTERIES   OF  WALL   STREET. 

is  announced  with  a  few  appropriate  words.  Then  bach 
go  the  hats,  bids  and  offers  resound  once  more,  and  the 
coffin  is  forgotten  in  the  coupon. 

By  this  time  the  room  is  almost  deserted.  A  strag- 
gling half-dozen  spectators  stand  near  the  door.  Per- 
haps twenty-five  brokers  are  round  the  table.  The  Free 
List  is  rapidly  finished  off.  If  any  member  «wish  to 
bring  forward  a  particular  stock  on  the  Eegular  List, 
which  was  hastily  passed  over  at  the  first  call,  now  is 
his  season.  Fortunately  for  the  reader,  the  bidding  to- 
day is  very  brief,  and  in  a  few  moments  the  Board 
adjourns. 

As  we  pass  into  the  corridor,  we  notice  a  boy  at  a 
side-stand  with  the  morning  share-list  for  sale,  printed 
in  a  private  office  up  stairs  almost  on  the  second  that 
the  first  call  is  finished.  The  Bankers  and  Brokers'  tele- 
graph, whose  wires  are  just  at  the  left,  has,  however, 
superseded  this  list  to  a  great  extent,  and  it  is  now 
useful  mainly  for  files. 

Before  us,  opening  on  the  floor  where  we  now  stand, 
is  the  room  of  the  Government  Board.  The  bidding 
there  is  still  going  forward,  but  only  a  small  portion  of 
the  members  are.  present.  In  fact,  in  order  to  see  this 
chamber  in  full  excitement,  it  is  necessary  to  be  on  hand 
=at  the  first  call.  The  early  Board  meets  at  a  quarter 
past  ten. 

Had  we  entered  at  that  hour,  we  should  have  found 
•ourselves  in  an  apartment  little  more  than  a  third  of  the 
size  of  that  occupied  by  the  Eegular  Board,  with  much 
the  same  appointments,  but  with  this  difference,  that 


A  DAY  AT   THE   BOAEDS.  35 

there  is  no  cock-pit,  and  the  sumptuously  cushioned 
seats  rise  tier  on  tier  from  the  floor  to  the  green  tapestry 
of  the  wall.  In  these  chairs  the  Government  Brokers 
sit.  At  the  head  of  the  chamber  is  the  rostrum  for  the 
officers,  and  the  order  of  proceedings  is  very  little  dis- 
similar from  that  which  we  have  already  witnessed.  The 
Vice-President  begins  :  — 

"6s  '81  registered,  —  '81  coupon.     5-20s  '62   regis- 
tered, —  coupon.     What 's  bid  ? " 

Here  and  there  from  the  flanking  chairs  come  sputter- 
ing bids  or  offers  :  — 

"  Ten  thousand  at  f ,  buyer  3." 

"  I  '11  give  an  |,  seller  3,  for  the  lot." 

"  \,  buyer  30,  for  fifty  thousand." 

"  I,  regular,  for  any  part  of  five  thousand." 

First  Voice.     "  Sold,  —  five  hundred." 

The  presiding  officer  repeats  the  sale  and  terms,  the 
Secretary  makes  his  registry,  and  a  new  bond  is  started. 

Sometimes  when  5-20s  are  called,  there  is  at  first  only 
one  voice,  which  rings  the  changes  on  "I  '11  give  115. 
I  '11  give  '15  for  a  thousand,  —  '15  for  a  thousand."  # 
Presently,  however,  before  any  response  follows  the 
offer,  a  member  in  a  distant  corner,  either  carelessly 
or  maliciously,  shouts  out,  "  I  '11  give  '14  for  a  thousand, 

—  '14  for  a  thousand." 

The  Vice-President  plies  his  hammer.     "  Fine  Irving, 

—  fine  Irving  fifty  cents."     The  Roll-Keeper  proceeds 
to  make  his  little  note  of  it,  and  Irving,  who  has  vio- 
lated the  rule,  founded  on  common-sense,  which  forbids 
a  member  from  making  a  bid  below  or  an  offer  above  the 


36  MEN  AND   MYSTERIES   OF  WALL   STREET. 

one  which  has  the  floor,  immediately  subsides  amid  the 
laughter  of  his  neighbors. 

Occasionally  an  interruption  of  a  grosser  character 
occurs,  a  member  leaping  from  his  seat  on  some  slight 
provocation,  and  striking  off  the  hat  of  the  man  who  has 
offended.  "  Fine  Harrison,  fine  Harrison  again,  fine,,  FINE 
him  again,  —  FINE  Harrison,"  cries  the  Vice-President, 
repeating  the  word  without  cessation  until  the  broker's 
wrath  has  been  appeased,  and  he  returns  to  his  chair 
with  the  disagreeable  reflection  that  a  heavy  score  is 
against  him  for  the  semiannual  settlement-day.  Every 
repetition  of  that  fatal  monosyllable  was  a  fresh  mark 
of  fifty  cents  or  a  dollar  against  his  name.  Generally, 
however,  the  Government  brokers  are  more  orderly  than 
their  neighbors  in  the  Regular  board.  Indeed,  the  whole 
proceedings  are  more  decorous  and  respectful,  the  bid- 
ding, half  the  time,  being  carried  on  in  a  low  conver- 
sational tone.  At  second  call  there  is  a  brief  excitement, 
but  when  "  things  are  dull "  throughout  the  street,  this 
room  peculiarly  reflects  the  external  influences. 
fc  Very  different  it  is,  however,  on  days  when  some 
special  cause  provokes  great  fluctuations.  Then  the 
members  spring  from  their  seats,  arms,  hands,  excitable 
faces,  rapid  vociferations,  all  come  in  play,  and  the  ele- 
ment of  pantomime  performs  its  part  in  assisting  the 
human  voice  as  naturally  as  among  the  Italians  of  Syra- 
cuse. To  the  uninitiated  the  biddings  here  are  as  un- 
intelligible as  elsewhere,  sounding  to  ordinary  ears  like 
the  gibberish  of  Victor  Hugo's  Compachinos.  But  the 
comparative  quietude  of  this  Board  renders  it  easier  to 


A  DAY  AT   THE  BOARDS.  37 

follow  the  course  of  the  market,  to  detect  the  shades  of 
difference  in  the  running  offers,  and  generally  to  get  a 
clearer  conception  of  this  part  of  the  machinery  of 
stock  brokerage.  Nor  is  it  only  for  grasping  those 
special  brevities  of  utterance  with  which  sales  are 
affected,  —  as  condensed  as  the  military  vocabulary  of 
Hardee's  Tactics,  —  that  this  Board  is  a  good  school. 
One  can  study  not  less  readily  that  other  feature  of  the 
market,  —  the  theatrical  effects,  the  simulated  eagerness 
which  seeks  to  influence  values  by  the  energy  with 
which  offers  are  made,  as  if  an  immense  money  force 
were  at  work  to  crush  down  5-20s  to  zero,  or  to  tide 
them  up  to  limitless  heights.  It  is  the  skill  of  fencers, 
the  false  lunges,  the  flourish  which  may  mean  a  parry 
or  a  thrust,  a  perpetual  series  of  deceptions  which  never 
deceive.  One  slowly  comes  into  a  clear  understanding 
that  all  these  enthusiasms  are  stale ;  that,  although  in 
some  instances  the  tactics  are  freshly  evolved  from  the 
unexpected  developments  of  the  day,  the  main  shaping 
of  the  register  is  very  much  like  the  results  of  a  political 
caucus  in  which  all  motions  and  nominations  have  been 
previously  arranged,  and  whatever  is  novel  is  due  to  the 
clashing  of  opposing  cliques.  If  the  visitor  wishes  to 
master  one  problem  at  a  time,  therefore,  he  will  keep  his 
seat  in  this  chamber,  and  he  will  find  abundant  room  for 
reflection  in  the  thought  that  here  around  him  are  the 
men  who  daily  gauge  the  value  of  a  billion  and  a  half 
of  national  debt,  whose  shouts  are  the  annihilations 
of  millions  or  a  crest-wave  of  momentary  fresh  wealth, 
rippling  through  bank-vaults  and  the  iron  chests  of  the 


38  MEN  AND  MYSTEKIES   OF  WALL  STEEET. 

thrifty,  east  and  west  along  the  tremulous  wire,  to  San 
Francisco  at  one  end  and  Frankfort  at  the  other. 

In  "  doing "  the  Stock  Exchange  for  the  first  time, 
however,  it  is  weU  to  content  one's  self  with  the  merely 
outward  aspects.  Brokerage  is  a  science,  and,  apart  from 
the  technical  difficulties,  the  phenomena  of  the  Boards 
depend  upon  a  great  number  of  distinct  forces,  all  acting 
from  without  and  only  disclosing  themselves  vaguely  in 
the  prices  of  the  daily  share  list.  Here  on  the  upper 
floor  the  official  record  has  notched  the  last  wave  line 
of  each  billowing  security,  but  below  fresh  elements  are 
working,  and  in  the  heaving  caldron  of  the  Long  Boom 
is  a  changeful  ebb  and  flow  that  has  neither  rule  nor 
limit  nor  certainty.  There,  least  of  all,  should  one  re- 
sort for  a  key  to  the  mystery  of  the  street ;  but,  having 
visited  it,  the  reader  will  have  prepared  himself  for  the 
explanations  of  subsequent  chapters. 

You  can  reach  the  Long  Room  from  the  antechamber 
on  Broad  Street,  from  the  Gold  Eoom  by  a  side  entrance, 
or  from  New  Street,  —  the  latter  ingress  affording  a  bet- 
ter opportunity  to  the  spectator.*  As  we  have  before 
stated,  it  is  a  deep  basin,  broken  up  into  circles  of 
broad  steps  descending  one  below  the  other  to  a  floor, 

*  The  presence  of  a  spectator  in  the  Long  Room  must  be  understood 
as  metaphorical.  That  theatre  of  finance  cannot  be  approached,  as  we 
are  informed  by  most  eminent  officials,  except  by  payment  of  fifty  dol- 
lars. This,  to  be  sure,  will  purchase  a  season  ticket.  But  as  single  ad- 
mission is  only  possible  on  the  same  terms,  it  makes  this  dramatic  per- 
formance the  most  costly  in  the  world.  The  cause  of  this  exclusiveness, 
which  has,  to  say  the  least,  an  absurd  aspect  to  mere  sight-seers,  is  partly 
because  of  the  incessant  calls  upon  the  courtesy  of  officers,  but  chiefly 


A  DAY  AT   THE   BOARDS.  39 

perhaps  fifteen  feet  in  diameter.  When  the  Kegular 
Board  is  convened,  this  room  is  usually  deserted  ;  but  it 
can  scarcely  ever  be  called  empty,  and,  frequently,  long 
after  half  past  ten  the  chamber  seethes  with  a  crowd  un- 
willing to  leave  the  perpetually  fresh  sensations  of  the 
free  market  for  the  slow  routine  of  official  sessions. 

At  all  other  hours  the  Long  Boom  is  thronged,  some- 
times densely  thronged.  Here  the  great  bulk  of  pur- 
chases and  sales  are  made.  In  the  Kegular  Board  an  aver- 
age of  seven  million  dollars'  worth  of  shares  are  sold  in  a 
day.  In  the  Long  Koom,  brokers  roughly  estimate  that 
ten  times  that  amount  is  bought  or  sold  between  sunrise 
and  nightfall.  On  field-days  the  whole  capital  stock  of 
a  speculative  railroad  will  be  tossed  from  hand  to  hand 
in  the  financial  shuttlecock.  A  hundred  dollars  become 
three  millions,  or  a  million  lessens  to  a  mill. 

There  are  the  same  shouts,  the  same  cries  of  messen- 
ger-boys, the  same  confusion  of  hands  and  arms,  which 
one  finds  in  the  rooms  above ;  but  here  everything  is 
more  intense,  blinding,  deafening.  Every  broker  has  a 
different  mission.  Two  hundred  and  seventy-nine  mem- 
bers may  be  bidding  for  two  hundred  and  seventy-nine 
different  stocks  in  the  same  breath.  Just  as  in  the  Ni- 

from  the  fact  that  the  lobbies  on  both  the  Broad  and  the  New  Street 
sides  have  been  found  very  valuable  places  of  resort  to  "outside  "  brokers 
and  speculators.  The  frequenters  have  nearly  all  the  advantages  of 
regular  brokers,  and  though  they  are  not  permitted  to  join  in  the  Long 
Room  cries,  there  is  nothing  to  prevent  their  making  quiet  bargains  on 
the  basis  of  current  bids.  Nearly  all  the  old  "  curbstone  "  dealers  now 
hold  tickets,  and  are  willing  to  pay  the  small  annual  charge  for  the  privi- 
lege of  warmth,  use  of  room,  and  the  superb  chances  for  speculation. 


40  MEN  AND  MYSTERIES   OF  WALL   STREET. 

agara  whirlpool  there  are  innumerable  minor  eddies, 
whirls  within  whirls ;  so  here,  also,  there  will  be  a  little 
circle  of  Erie,  another  of  Pacific  Mail,  New  York  Central, 
Eock  Island,  or  any  other  great  speculative  stock,  with 
the  skirting  swirl  of  fifty  other  stocks  boiling  up  in 
spasms  and  flowing  into  a  vast  maelstrom  of  sound. 

Orders  of  every  description  and  of  every  conceivable 
amount  come  in  from  Philadelphia,  Boston,  Baltimore, 
from  strange  small  towns  in  border  States,  from  the  re- 
gions of  corn  and  cotton  and  iroji,  from  where  the  spin- 
dle flies  incessantly  or  the  sugar-cane  crackles  in  the  mill, 
—  from  the  capitals  of  Europe  and  the  capitals  of  new- 
fledged  States.  No  city  would  seem  too  great  or  village 
too  small  not  to  have  some  vivid  interest  in  this  smelt- 
ing-furnace  of  values.  Laden  with  these  commissions, 
with  the  secret  instructions  of  some  king  operator,  with 
private  schemes  of  their  own,  the  brokers  fling  them- 
selves into  the  meltfe  with  "What  's  bid  for  Lake 
Shore  ?"  "  Five  thousand  Lake  Shore  at  89,  buyer  30." 
"  At  '8£,  cash."  "  Take  'em."  "  Who  ?  —  how  many  ?  " 
"  Five  hundred."  "  All  right."  "  Hundred  St.  Paul  at  \, 
buyer  3."  "  f ,  seller  3,  for  a  hundred."  "  Fort  Wayne." 
"  Northwest."  "  Any  part  of  a  thousand  at  \,  cash" 
"  One  hundred  at  f ."  "  Erie  at  £,  cash."  "  I  want  five 
hundred  Reading."  "  Give  '2|  for  three  hundred  Cen- 
tral." "  1 11  loan  two  hundred."  "  I  '11  take  a  hundred 
flatr  "  Fifty  Eock  Island  at  '4f ."  "  Hundred  at  f." 
"  I  '11  sell  a  hundred  more."  "  Take  'em."  "  Give  it  for 
five  hundred  more." 

Peaked  faces,  rosy  faces,  faces  like  sunshine,  and  faces 


A   DAY  AT  THE  BOAEDS.  41 

over  which  ripple  all  forms  and  shadows  of  expression. 
Voices  like  a  church-organ  and  voices  like  a  bag-pipe ; 
stridulous,  whooping,  screeching,  deep-toned,  piping 
voices,  —  voices  like  a  trip-hammer  crashing  through  all 
other  cries,  and  carrying  the  whole  market  down  by  an 
offer  as  tremendous  as  the  lungs  which  gave  it  birth. 
Every  step  and  crevice  jammed  with  men.  Note-books, 
arms,  fists,  dexter  fingers,  hats,  heads,  tossing,  swaying, 
darting  hither  and  thither  with  nervous  eagerness,  and 
suggesting  a  perpetual  explosion  of  bomb-shells  from  be- 
low. Now  concentrating  upon  a  single  stock ;  again  break- 
ing out  into  twenty  different  markets.  Supple  youths 
loom  up  above  the  level,  with  feet  apparently  planted 
upon  nothing  and  standing  firmly  there,  snapping  up  an 
odd  lot  of  Pacific  Mail  here,  and  selling  five  thousand 
Michigan  Southern  there,  buying  a  "put,"  making  a 
loan,  doing  it  all  in  the  same  moment  like  flashing  light- 
ning, and  then  like  lightning  disappearing  in  the  broad- 
cloth darkness.  Dante,  gazing  down  into  this  human 
craze,  would  have  added  another  book  to  //  Inferno. 
Men  might  go  mad  here  and  no  one  know  it.  In  this 
hot  air  and  reeling  life  they  would  go  mad,  were  it  not 
for  that  great  undercurrent  of  humor  which  bubbles  up 
continually  through  the  earnest  confusion.  In  the  old 
days  when  buying  Erie  wras  not  like  pumping  out  the 
Atlantic  Ocean,  and  Daniel  Drew  was  wont  to  send  in  a 
legion  of  brokers  with  cross  orders  of  "  carry  it  up  to 
90,"  or  "  sell  it  down  to  80,"  and  the  Long  Eoom  would 
lurch  and  roll  under  the  tornado  of  perplexing  orders 
and  bids,  a  lank  face  once  emerged  from  the  crowd  with 


42  MEN  AND  MYSTERIES   OF  WALL   STREET. 

a  rocket-like  cry  of  "  I  '11  buy  any  part  of  half  a  million 
Erie  at  33 ! "  Smash  went  the  man's  hat  down  over  his 
eyes.  "  Give  us  a  power  of  attorney  on  your  brandy- 
bottle  at  Delmonico's,"  shouted  somebody.  A  roar  of 
laughter  followed,  and,  the  fit  of  fun  still  on,  a  broker 
with  rich,  mellow  voice  struck  up,  — 

"  John  Brown's  body  lies  a  mouldering  in  his  grave  " ; 

the  whole  assembly  beating  time  with  feet  and  hand, 
and  joining  uproariously  in  the  chorus. 

Such  transitions  are  of  daily  occurrence,  and  the  im- 
mense flow  of  ready  gayety  perpetually  relieves  the  tense 
and  jaded  brains  of  the  habitues  with  some  fresh  and 
lively  outburst. 

Usually  the  Long  Eoom  begins  to  thin  out  by  four  in 
the  afternoon,  but  in  periods  of  high  speculation  the 
session  prolongs  itself  till  five,  the  flickering  jets  of  gas 
from  the  pillars  throwing  a  ghastly  flare  over  the  pale 
and  weary  faces. 

In  the  feverish  days  of  the  war,  night  brought  no  rest 
to  the  stockbrokers.  Scarcely  was  dinner  well  through 
than  up  at  Madison  Square,  first  in  a  cellar  beneath  the 
Fifth  Avenue  Hotel,  afterward  in  Gallaher's  Exchange 
at  the  Broadway  corner  of  Twenty-Third  Street,  the 
members  came  together  anew,  and  carried  on  their  hoarse 
and  frantic  biddings  far  into  the  small  hours.  The  Jen- 
kins and  Ketchum  defalcations  fortunately  checked  this 
human  madness  ;  but  even  at  present,  during  every 
access  of  speculative  excitement,  throngs  gather  in  the 
corridors  of  the  Fifth  Avenue  Hotel,  and  country  guests 


A   DAY  AT   THE   BOAKDS.  43 

can  hear  on  every  side  the  confusing  street  slang, 
with  its  subdued  but  significant  utterances  of  "Take 
'em ! "  "A  thousand  more  ! "  "  Closed  at  a  quarter ! " 
Should  we  follow  the  individual  broker  through  a  single 
twenty-four  hours,  we  should  have  a  still  more  startling 
conception  of  the  engrossing  character  of  this  profes- 
sion. At  waking,  he  calls  for  his  morning  paper  and 
reads  once  more  the  "  quotations  "  of  yesterday.  His 
breakfast  is  a  sandwich  of  toast  and  Fort  Wayne,  or 
Central,  or  5-20s.  He  talks  stock  all  the  way  down  town 
in  the  stage.  He  bids  from  nine  till  five  ;  he  whispers 
of  street  incidents  to  his  neighbor  in  the  up-town  car ; 
he  dines  upon  stocks,  he  mingles  stocks  with  the  smoke 
of  his  post-prandial  cigar,  he  crams  his  "  book "  in  his 
pocket  and  saunters  up  to  the  Fifth  Avenue,  and  when 
finally  he  consents  to  retire,  he  dreams  of  stocks  the 
whole  night  long.  This  ceaseless  tread-mill  would  seem 
to  be  quick  murder.  Yet,  averagely,  a  healthier  class 
cannot  be  found  than  that  of  men  who  deal  in  stocks. 
They  are  robust,  cheerful,  bubbling  over  with  animal 
spirits.  One  reason,  undoubtedly,  is  that  they  are  thor- 
oughly good  livers.  They  dine  well  and  dress  well.  But 
beside  this,  the  luck  of  the  market  compels  them  to  a 
sensible  philosophy.  None  know  better  the  fickleness 
of  fortune.  None  bear  up  more  bravely  under  reverses. 
The  very  variety  of  their  life  is  healthful.  Eoutine  it- 
self is  poisonous  to  brain  and  body,  but  the  technicali- 
ties and  small  details  of  brokerage  soon  become  a  sort 
of  second  nature,  and  the  mind  is  left  free  to  enter  into 
all  the  absorbing  intricacies  of  speculation,  replete  with 


44  MEN  AND  MYSTERIES   OF  WALL   STREET. 

dramatic  episodes,  and  so  fascinating  that  the  gains  or 
losses  would  be  as  nothing,  were  they  not  essential  ele- 
ments in  the  successful  issue  of  the  game. 

To  understand  the  real  life  of  the  broker,  and  to  ac- 
quire a  clear  perception  of  the  daily  features  of  the  Stock 
Boards,  one  must  be  content  to  begin  with  the  alphabet 
and  master  the  language.  It  is  impossible  to  compre- 
hend the  business  of  Wall  Street  unless  all  the  condi- 
tions of  sale  and  purchase  are  accurately  set  forth,  un- 
less broker's  terms  are  rendered  thoroughly  intelligible, 
and  the  main  forces  which  group  around  the  market  are 
distinctly  grasped.  Some  of  these  details,  however  im- 
portant, are  not  the  less  notably  dry  and  a  weariness  to 
the  soul.  But  without  a  proper  apprehension  of  all  the 
cog-wheels  and  running  gear  of  speculation,  the  game 
itself  will  be  only  a  delusion  and  a  snare. 


THE   MACHINEEY   OF   SPECULATION.  45 


CHAPTEE    IV. 

THE  MACHINEEY   OF   SPECULATION. 


portion  of  the  world  at  large  whose  evil 
I  genius  has  borne  it,  willingly  or  unwillingly,  into 
court-rooms  and  lawsuits,  is  probably  familiar  with  that 
sublimity  of  humbug  known  as  Legal  Fiction.  Its  car- 
dinal idea  is  that  things  are  not  what  they  are.  The 
New  York  Stock  Exchange  has  a  pleasant  hallucination 
of  this  kind.  All  its  members  are  supposed  to  be  bro- 
kers till  proved  to  be  otherwise.  This  proof  is  diligently 
not  sought  for. 

The  absurd  hypothesis  has  an  advantage.  It  enables 
us  to  consider  the  theoretical  "as  the  practical.  The 
New  York  Stock  Board,  then,  according  to  the  presump- 
tion of  its  constitution,  is  an  organization  of  agents  who 
purchase  or  sell  stocks  or  bonds  on  commission.  This 
commission,  when  a  customer  buys  for  regular  invest- 
ment, is  one  quarter  of  one  per  cent  on  the  par  value  of 
securities.  In  case  of  speculative  transactions,  one  half 
of  this  is  charged.  Recently  a  saving  clause  has  been 
adopted,  making  these  rules  binding  where  no  agreement 
has  been  made  to  the  contrary.  There  is  an  immense 
meaning  in  those  italics.  They  can  be  understood  bet- 
ter, however,  if  disregarded  just  at  present. 

Throwing  out  of  view  the  question  of  regular  invest- 


46  MEN   AND   MYSTERIES   OF  WALL   STREET. 

ment,  this  broker's  per  cent  amounts  to  twelve  and  a  half 
cents,  or  a  New  York  shilling,  upon  every  transaction  in 
shares  whose  par  value  is  one  hundred  dollars.  To  the 
uninstructed  reader  this  is  a  microscopic  item.  One  and 
a  quarter  mills  on  the  dollar  is  to  the  cent  per  cent  of  a 
Broadway  loan  office  what  infusoria  are  to  the  megathe- 
rium. The  tax  is  certainly  not  exorbitant,  but  its  sum 
total  is  worth  considering. 

We  have  before  us  the  authorized  list  of  shares,  bonds, 
and  governments  dealt  in  by  the  Stock  Exchange.  Com- 
paring this  schedule  with  the  published  statements  of 
the  various  incorporations,  etc.,  as  to  the  full  volume  and 
par  value  of  all  these  securities,  we  find  that  the  sum  in 
gross  is  considerably  above  three  billions  of  dollars.  If 
the  New  York  brokers  should  have  this  amount  of  val- 
ues pass  through  their  hands  once  only  in  the  year,  their 
profit  as  agents  would  be  three  million  seven  hundred 
and  fifty  thousand  dollars.  Moreover,  it  is  to  be  noted 
that  to  every  buyer  there  is  a  seller,  and  that  on  both 
transactions  the  commission  is  levied.  Obviously,  there- 
fore, the  real  percentage  is  doubled,  or  two  and  a  half 
mills  on  a  dollar.  In  other  words,  the  brokers  would 
take  seven  and  a  half  millions  out  of  the  whole  every  time 
the  entire  bulk  is  sold.  How  often  does  such  a  sweep- 
ing sale  occur?  Perhaps  never,  but  its  equivalent  is 
sold  on  an  average  about  every  two  months.  This  is  as- 
certainable  partly  through  the  records  of  stock  sales.  In 
1868,  at  the  Eegular,  and  the  now  non-existent  Open 
boards,  there  were  bought  19,713,402  shares.  The  bonds 
bought  during  the  same  period  are  stated  at  a  par  valua- 


THE   MACHINERY   OF   SPECULATION.  47 

tion  of  $245,245,240.  Calling  $100  the  par  of  stock, 
and  adding  the  two  amounts,  we  have  a  sum  total  of 
two  billions  two  hundred  millions. 

But  we  are  only  on  the  threshold  of  a  proper  estimate. 
Ask  an  intelligeiilbbroker  where  sales  are  chiefly  effected. 
The  answer  will  be,  "  Stocks,  in  the  Long  Eoom  ;  govern- 
ments, over  the  counter."  At  the  official  boards,  we  shall 
be  told,  there  is  scarcely  one  tenth  of  the  real  business 
of  the  stock  market.  Unfortunately,  no  registry  is  kept 
of  these  other  transactions,  and  in  reckoning  them  as 
ten  times  the  whole  sum  we  are  liable  to  the  danger 
attendant  upon  all  conjectural  calculations.  Even  on 
the  supposition  that  the  recorded  sales  are  one  eighth  of 
the  amount  subject  to  the  percentage  we  shall  have  a 
total  of  over  seventeen  and  a  half  billions.  The  two 
and  a  half  mills  taken  at  the  twofold  sale  and  pur- 
chase of  one  dollar's  worth  of  securities  would  give,  if 
levied  in  similar  proportions  upon  the  entire  bulk,  a  tax 
through  commissions  of  forty-three  million  seven  hun- 
dred and  fifty  thousand  dollars. 

There  are  not  more  than  four  hundred  stockbrokers  who 
do  any  considerable  business  on  "  the  street."  Dividing 
up  this  percentage  among  that  number  of  members  of 
the  Exchange,  we  find  that  it  will  allow  of  a  yearly  in- 
come to  each  of  about  $  109,000  ! 

These  figures  explain  by  inference  the  secret  of  the 
rule,  which  makes  the  broker's  per  cent  subject  to  modi- 
fication, viz.  in  case  of  agreement  to  the  contrary.  Mem- 
bers naturally  compete  with  each  other,  and  a  reduction 
to  a  half,  or  even  a  quarter,  of  the  full  commission  is  fre- 


48      MEN  AND  MYSTERIES  OF  WALL  STREET. 

quent  street  practice.  There  are  the  One-Sixteenth  men, 
who  take  6|  cents  on  the  hundred  dollars ;  the  One- 
Thirty-Second  class,  who  are  satisfied  with  3|  cents  ;  and 
even  a  One-Sixty-Fourth  class,  who  make  no  objection 
to  dividing  the  preceding  profit  by  twf»  The  larger  the 
order,  the  greater  the  reduction. 

This  commission  is  levied  upon  the  par  value  of  stock. 
A  share  selling  at  35  costs  as  much,  in  the  matter  of 
broker's  per  cent,  as  one  quoted  at  90  or  110.  It  is 
charged  when  the  stock  is  bought,  and  again  upon  sale ; 
and  the  greater  proportion  of  really  first-class  houses 
adhere  to  the  one  eighth  of  one  percentage,  even  in  the 
case  of  old  customers.  This  is,  unquestionably,  one 
of  the  most  profitable  features  of  brokerage,  and  there 
are  firms  whose  yearly  commissions  amount  to  upward 
of  a  million  dollars.  The  great  rivalry  for  orders,  how- 
ever, has  sensibly  reduced  the  gain  from  this  source,  and 
the  average  of  all  transactions  is  probably  not  above 
$6.25  on  100  shares  of  stock,  the  par  of  which  would  be 
$10,000. 

When  a  customer  has  arranged  the  terms  of  commis- 
sion, the  next  question  is  how  the  stock  is  to  be  bought 
or  sold.  To  approach  this  part  of  the  machinery  prop- 
erly, it  is  desirable  to  concentrate  the  attention  upon 
what  may  be  styled  "ideal  brokerage." 

The  ideal  of  brokerage  is  the  purchase  or  sale  of 
securities  for  outside  parties,  where  the  object  is  an  ab- 
solute acquisition  of  property,  or  absolute  sale  of  prop- 
erty. Generally  speaking,  there  must  be  in  such  case  a 
deposit  of  the  stock  or  of  the  money  value  of  the  stock. 


THE   MACHINERY   OF   SPECULATION.  49 

Of  course,  this  rule  loses  its  rigidity  where  the  customer 
is  a  heavy  capitalist  or  a  person  of  recognized  responsi- 
bility ;  brokers,  in  such  event,  habftually  buying  on  no 
further  guaranty  than  a  verbal  or  telegraphic  order. 

The  first  point  necessary  to  know  is  when  the  cus- 
tomer wishes  to  receive  or  deliver  the  stock.  He  may 
prefer  to-day,  to-morrow,  or  a  more  distant  date.  Each 
of  these  methods  of  settlement  has  a  special  name. 

Cash,  in  broker's  language,  means  that  the  contract 
entered  upon  shall  be  fulfilled  by  payment  and  delivery 
of  stock,  at  or  before  2.15  P.  M.  of  the  day  of  sale. 

Regular,  or  Regular  Way,  is  the  term  for  sale  when 
the  delivery  is  to  be  made  at  or  before  2.15  P.  M.  of  the 
day  succeeding  that  of  contract. 

Buyer's  Option,  is  where  the  purchaser  has  the  right 
to  require  the  delivery  of  stock  upon  any  day  within 
the  time  covered  by  the  option. 

Seller's  Option,  is  where  the  day  of  delivery  is  at  the 
convenience  or  pleasure  of  the  person  making  the  sale, 
within  the  time  stipulated  at  the  moment  of  sale. 

In  all  cases,  notice  must  be  given  by  the  holder  of  the 
option  to  the  other  party  in  the  contract,  on  or  before 
two  o'clock  of  the  day  previous  to  that  when  delivery  of 
stock  is  called  for ;  but  the  stock  is  deliverable  at  the 
termination  of  the  contract  without  notice. 

The  sharp  elliptical  offers  and  bids  at  the  Boards  ex- 
press the  options  in  such  phrases  as  Buyer  3,  Seller  10, 
Seller  30,  Buyer  30,  —  the  numerals  standing  for  the 
number  of  days  during  which  the  option  continues.  So 
far  as  concerns  the  principle  of  this  transaction,  there  is 
nothing  to  hinder  contracts  extending  to  any  point  in 


50      MEN  AND  MYSTERIES  OF  WALL  STEEET. 

the  year ;  but  to  brokers  a  sale  buyer  7,  buyer  9,  buyer 
11,  12,  21,  etc.,  would  affect  the  ear  like  a  wrong  note  in 
music.  Custom  has*made  3,  10,  30,  60,  90,  the  usual 
figures  for  both  descriptions  of  options. 

A  broker  receiving  an  order  to  sell  500  shares  of  the 
Chicago  Eock  Island  and  Pacific  Eailroad  Company,  at 
105,  would  go  to  the  Board,  and,  according  to  his  in- 
structions, shout  out,  "I  '11  sell  500  Eock  Island  at  '5, 
cash,"  "500  at  '5,  regular,"  "500  '5,  seller  3,"  "500 
'5,  buyer  30,"  dependent  upon  the  desire  of  his  cus- 
tomer. 

It  is  apparent  that  where  the  seller  wishes  money  at 
-once,  he  sells  Cash ;  where  he  hopes  to  get  a  better  price, 
or  cannot  make  a  delivery  of  stock  until  next  day,  he 
sells  Regular ;  where  a  still  longer  time  is  required  be- 
fore he  can  make  a  delivery,  he  sells  Seller's  Option,  or  if 
ready  for  delivery  at  any  moment,  he  sells  Buyer's  Option, 
and  thereby  gets  a  better  price,  as  the  buyer  is  willing 
to  pay  proportionately  for  the  advantage  which  the  ad- 
vantage of  time  gives  him. 

Cash,  Regular,  and  a  three  days'  option  bear  no  inter- 
est. Beyond  three  days'  option  six  per  cent  interest  (per 
annum)  is  paid  by  the  buyer  from  the  day  of  sale  to  the 
day  of  delivery.  And  this  interest  is  due  whether  the 
sale  be  on  buyer's  or  seller's  option,  the  rule  being 
.that  the  actual  holder  of  stock  should  be  remunerated 
for  the  time  during  which  his  property  lies  dead  in  his 
hands. 

Transactions  either  by  Cash  or  Eegular  Way  are  car- 
ried through,  usually,  by  verbal  contract  alone ;  and,  in 


THE   MAGHINEKY   OF   SPECULATION.  51 

general,  a  nod  of  the  head  as  well  as  word  of  mouth  suf- 
fices to  make  a  bargain  binding  on  both  buyer  and  seller. 
In  options,  however,  it  is  customary  to  give  acknowledg- 
ments after  a  set  formula.  Thus,  if  the  firm  of  Takem 
and  Makem  had  received  an  order  to  buy  500  shares  of 
New  Jersey  Central  on  February  10,  1870,  at  101, 
buyer's  option,  for  30  days,  they  might  have  sent  a  mem- 
ber of  their  house  or  some  other  broker  into  the  Long 
Eoom.  His  first  question  would  be,  "  How  is  New  Jer- 
sey Central?"  If  answered,  "'1-'1|,"  he  begins  to 
shout,  "  I  '11  give  101,  buyer  30,  for  five  hundred  New 
Jersey  Central."  Possibly  another  broker,  entering  from 
New  Street,  with  an  order  to  sell  New  Jersey  Central 
down  to  100  if  necessary,  has  commenced  simultaneously 
to  cry,  "  Any  part  of  a  thousand  '1,  seller  30."  Broker 
No.  1  replies,  "  101,  buyer  30,  for  five  hundred."  "  Sold," 
screams  the  other.  The  two  now  come  together,  give 
the  name  of  buying  and  selling  firms,  and  the  subjoined 
papers  are  subsequently  exchanged,  after  2.15  P.  M.,  gen- 
erally. 


500  Shares.     101,  R  30. 

NEW  YORK,  February  10,  1870. 

>:::•:  Q  >:::< 


;  C/3  >:;:< 


We  have  SOLD  to  TAKEM  &  MAKEM  Five  Hun- 
dred (500)  Shares  of  the  Capital  Stock  of  the  New  Jersey 
Central  R.  R.  Co.  at  One  Hundred  and  One  (101)  per 
cent,  payable  and  deliverable,  buyer's  option,  within  Tliirty 
days,  with  interest  at  the  rate  of  Six  per  cent  per  annum. 
Either  party  having  the  right  to  call  for  deposits  of  Ten  per 
cent  during  the  pendency  of  this  contract. 

JONES  &  ROBINSON. 


52  MEN  AND   MYSTERIES   OF  WALL   STREET. 


500  Shares.     101,  B.  30. 

NEW  YORK,  February  10,  1870. 
We  have  PURCHASED  of  JONES  &  ROBINSON 
Five  Hundred  (500)  Shares  of  the  Capital  Stock  of  the 
New  Jersey  Central  R.  R.  Co.  at  One  Hundred  and  One 
(101)  per  cent,  payable  and  deliverable,  buyer's  option, 
within  Thirty  days,  with  interest  at  the  rate  of  Six  per  cent 
per  annum.  Either  party  having  the  right  to  call  for  de- 
posits of  Ten  per  cent  during  the  pendency  of  this  contract. 
TAKEM  &  MAKEM. 


These  forms  are  now  universally  adopted  in  all  "  op- 
tion" transactions,  and  through  them  a  large  propor- 
tion of  speculative  movements  are  effected.  Since  the 
Government  tax  of  one  cent  on  every  purchase  or  sale 
of  a  hundred  dollars  has  been  enforced,  the  acknowl- 
edgments are  frequently  covered  with  revenue  stamps, 
not  merely  upon  the  face,  but  down  over  the  entire 
back  of  the  paper. 

"  Cash,"  "  Eegular,"  and  options  comprise  the  ordinary 
terms  heard  at  the  Boards.  A  sale,  however,  may  take 
place  at  a  time  when  the  transfer-book  of  the  company 
is  closed,  either  for  dividend  or  for  an  election.  In  such 
event,  a  transfer  of  shares  or  the  issue  of  new  certifi- 
cates is  impossible.  If  the  purchase  is  made  Cash,  the 
buyer  receives  the  old  certificate  with  a  power  of  attor- 
ney, and  upon  the  opening  of  the  books  the  transfer- 
clerk  makes  the  substitution  if  desired.  Power  and  Cer- 
tificate is  the  broker's  term  at  such  a  sale,  and  in  share 
price-lists  was  formerly  printed  p.c. 

When  similar  sales  are  made  for  time,  the  phrase  used 


THE   MACHINERY   OF   SPECULATION.  53 

was  formerly  At  the  Opening,  abbreviated  in  stock- 
reports  to  o.p.g. ;  the  meaning  of  the  seller  being  obvi- 
ously that  a  delivery  will  be  made  as  soon  as  the 
transfer-books  are  again  at  the  service  of  the  public. 
Many  certificates  of  stock,  however,  pass  from  hand  to 
hand  without  transfer. 

1  The  usage  "of  the  Stock  Board  forbids  the  sale  of  less 
than  five  shares.  Ten  shares  is  the  real  unit.  Less 
than  this  amount  is  styled  an  "odd  lot,"  and  sells  a 
trifle  above  or  below  the  market  price,  according  as  one 
wishes  to  dispose  of  or  to  purchase.  A  broker,  with  a 
commission  to  buy  three  shares  of  a  certain  stock,  goes 
to  the  Board,  and  when  some  one  cries,  "  Any  part  of 
fifty,"  he  shouts,  "  Take  'em."  "  How  many  ? "  "  About 
five,"  is  the  answer ;  the  broker  holding  up  three  fingers 
to  signify  the  number  purchased.  In  case  of  an  option, 
where  circumstances  may  delay  delivery,  the  stock  being 
in  Philadelphia  or  London,  the  broker  sells  "about 
buyer  10,  —  about  seller  30."  In  bids  or  offers,  the 
usual  fraction  is  an  eighth,  while,  on  the  London  Stock 
Exchange,  one  sixteenth  is  the  habitual  fractional  unit. 
At  the  New  York  Board,  however,  on  a  close  market 
sometimes  an  eighth  and  a  sixteenth  are  bid  or  offered. 
With  this  occasional  exception  the  bids  run  numeri- 
cally, 1,  i  i  f,  i,  f,  f,  |,  2. 

At  present,  purchases  or  sales  of  this  absolute  charac- 
ter form  but  a  small  proportion  of  Wall  Street  business. 
When  stock  is  bought  for  permanent  investment,  or 
when  sold  in  order  to  change  the  employment  of  capital, 
this  method  is  naturally  adopted.  Yet  even  for  these 


54  MEN  AND  MYSTERIES   OF  WALL  STREET. 

ends  it  is  not  unusual  for  outsiders  to  make  use  of  the 
element  of  credit,  whereby  stock  operations  can  be  con- 
ducted with  even  greater  disproportion  of  capital  to  the 
volume  of  business  than  characterizes  the  ordinary 
transactions  of  trade.  This  expansion  of  money,  by 
which  a  hundred  dollars  may  perform  the  service  of  a 
thousand,  is  technically  known  as  the  "  margin." 

Still  holding  the  idea  of  actual  investment  in  mind, 
let  us  suppose  that  a  young  Pennsylvanian  has  just  in- 
herited a  hundred  and  fifty  thousand  dollars,  —  most  of 
it  in  manufacturing  stock.  He  has  come  to  New  York 
with  some  ten  or  twelve  thousand  dollars,  and  goes  to  a 
broker,  —  perhaps  an  old  family  friend  :  "  I  notice  that 
5-20s  '67  registered  are  selling  at  109.  Now  I  want 
you  to  buy  $  8,000  bonds  ;  if  it  were  only  next  month 
I  'd  put  ninety  thousand  dollars  more  in  it,  and  then  off 
to  Europe.  The  bother  is,  I  can't  realize  on  that  factory 
property  just  this  moment,  and  meanwhile,  of  course, 
governments  will  rise."  "  That 's  probable,"  replies  the 
broker ;  "  but  if  you  can  pledge  your  ninety  thousand  in 
thirty  days,  and  will  deposit  ten  thousand  now,  I  '11  buy 
the  whole  lot  to-day.  You  must  pay  me  an  eighth  of  one 
per  cent  commission,  and  interest  of  seven  per  cent  on 
what  I  lend  you.  If  money  costs  me  more  than  that,  you 
must  make  the  extra  interest  good.  I  shall  allow  you 
seven  per  cent  interest  on  what  you  leave  with  me,  and 
you  will  be  insured  against  the  risk  of  a  rise.  If  the 
stock  falls,  however,  you  must  correspondingly  increase 
your  margin."  "Done,"  responded  the  Pennsylvanian. 
"  Buy  $  100,000,  and  if  you  want  a  trifle  more  of  deposit 


THE   MACHINERY   OF   SPECULATION.  55 

you  shall  have  it.  The  balance  shall  be  here  in  thirty 
days  sure." 

The  broker  sends  over  to  the  Board  and  buys  $  100,000 
registered  5-20s  of  '67,  regular  way ;  and  then  looks 
about  him  to  see  how  he  shall  meet  his  new  obliga- 
tion. In  twenty-four  hours  he  will  have  to  pay  out 
$109,000.  His  customer  finally  deposited  $11,000. 
There  are  $  98,000  to  be  hunted  up.  Possibly  he  has 
ten  thousand  dollars  at  his  bank,  but  the  rest  of  his 
capital  is  tied  up  as  completely  as  the  property  of  his 
friend  of  the  Keystone  State. 

Two  usages  of  Wall  Street  make  the  problem  easy. 
The  New  York  banks  allow  broker  depositors  of  repu- 
table standing  to  draw  checks  for  amounts  immensely 
disproportionate  to  that  actually  to  their  credit.  These 
checks,  sometimes  for  two  hundred  thousand  dollars,  are 
promptly  "  certified,"  i.  e.  guaranteed  as  representing  that 
sum  of  bona  fide  deposits,  although  the  books  may  not 
show  a  real  credit  of  even  five  thousand  dollars.  This 
species  of  accommodation  is  based  on  confidence  in  the 
giver  of  the  check,  who  is  bound  in  honor  to  make  the 
whole  amount  good  before  3,  P.  M.,  of  the  same  day. 
On  the  other  hand,  banks  and  banking-houses  freely 
lend  money  on  good  bond  or  stock  security,  within  ten 
or  twenty  per  cent  of  par  or  the  selling  or  market 
value. 

When,  therefore,  the  bonds  are  presented,  our  broker 
gives  a  check  on  his  bank  for  the  full  amount.  The 
seller  hastens  to  get  it  certified,  and  the  buyer  proceeds 
to  one  or  more  of  the  great  loan  houses  or  banks,  and 


56  MEN  AND   MYSTERIES   OF  WALL   STREET. 

readily  borrows  $  100,000.  In  financial  language,  the 
bonds  on  which  the  money  is  raised  are  called  "  col- 
laterals," and  the  act  of  placing  them  in  pawn  is  styled 
"  hypothecation."  There  were  ten  thousand  dollars  pre- 
viously to  the  broker's  credit  at  his  bank.  He  now  de- 
spatches the  hundred  thousand,  together  with  his  cus- 
tomer's deposit,  and  thereby  makes  his  check  good,  as 
well  as  insuring  a  slight  balance  in  his  favor. 

The  $  11,000  originally  exacted  by  the  broker,  and 
the  difference  between  the  cost  of  the  bonds  and  what 
was  borrowed  upon  them,  are  both  called  "  margins."  It 
is  obvious  that  their  necessity  arises  from  the  fluctuating 
character  of  stocks.  Were  the  bonds  to  fall  to  99J,  the 
lending  bank  would  be  in  the  position  of  holding  a 
pledge  of  less  value  than  the  money  advanced  upon  it. 
Against  such  contingency  the  lender  protects  himself, 
first,  by  the  margin,  seldom  less  than  ten  per  cent,  often 
widening  in  case  of  certain  stocks  to  twenty  or  even 
forty  per  cent ;  secondly,  by  furnishing  money  only  on 
condition  that  it  may  be  demanded  at  any  moment. 
Such  an  arrangement  is  known  as  a  "  call  loan."  If  the 
market  falls,  the  bank  either  calls  for  the  money  or  a 
proportionate  fresh  amount  of  stock.  Now  the  broker's 
power  to  buy  on  a  margin  depends  upon  the  certainty 
that  the  collaterals  will  have  a  definite  borrowing  capa- 
city. If  in  a  week  the  5-20s  are  at  95,  the  loan  may 
be  recalled,  and  a  new  one  must  be  made  either  with  the 
same  or  different  parties.  Perhaps  he  succeeds  in  bor- 
rowing $90,000.  But  he  has  still  the  difference  of 
$  10,000  to  make  up,  and  if  his  bank  account  remains 


THE  MACHINERY  OF   SPECULATION.  57 

as  before,  he  will  be  unable  to  meet  his  obligations.  Of 
course,  no  broker  would  be  willing  to  place  himself  in 
such  a  position,  and  the  first  clause  of  every  contract  for 
purchase  by  margin  is  that  the  relative  per  cent  must  be 
kept  up.  If  a  customer  fails  to  do  this  on  due  notice, 
the  stock  is  sold  out  at  once.  In  the  present  instance, 
the  broker,  had  the  bonds  shown  signs  of  weakness, 
would  have  immediately  telegraphed  to  Pennsylvania  for 
more  money.  As  a  matter  of  history  the  bonds  did  not 
fall,  but,  on  the  contrary,  rose  steadily  to  115.  When 
the  transaction  was  settled,  therefore,  the  country  buyer 
found  that  by  paying  some  six  hundred  dollars'  in- 
terest he  had  made  six  thousand  dollars ;  since,  had  he 
waited  until  he  could  realize  upon  his  home  property, 
he  would  have  had  to  give  one  hundred  and  fifteen 
thousand  dollars  for  what  he  now  receives  at  one  hundred 
and  nine  thousand.  "Were  he  to  decide  to  avail  himself 
of  the  high  market,  and  to  sell  out  his  bonds,  the  advan- 
tage of  the  margin  would  be  still  more  apparent.  He 
has  been  putting  out  his  money  all  the  while  at  seven  per 
cent  interest,  and  now  receives  it  back  with  six  thou- 
sand dollars  additional,  minus  the  charges  of  his  brokers, 
which  would  amount,  all  told,  to  scarcely  a  bagatelle  of 
the  customer's  profit. 

This  is  a  conservative  illustration,  but  it  would  be 
easy  to  find  a  far  more  startling  example  in  the  ev^ery- 
day  facts  of  Wall  Street.  On  November  14,  1868, 
Erie  sold  in  the  morning  for  36-|.  That  day  a  man 
with  thirty-seven  thousand  dollars  of  borrowed  money, 
who  had  a  premonition  of  what  was  coming,  could  have 


58      MEN  AND  MYSTERIES  OF  WALL  STREET. 

gone  to  a  broker,  arranged  for  a  ten  per  cent  margin  on 
selling  value,  and  simply  said :  "  Buy  at  once  not  above 
37,  and  sell  to-night,  regular,  for  the  best  figure  you 
can  get."  That  afternoon  Erie  was  at  52£.  The  specu- 
lator's account  would  have  stood :  — 


DR. 

CR. 

10,000  Erie  at  37, 

.     $370,000 

10,000  Erie  at  52£, 

$  522,500 

Margin, 

.      37,000 

Margin  returned,  . 

.    37,000 

Two  commissions  at  -|  of  1,  2,500 

Net  profit, 

150,000 

$  559,500 

$  559,500 

He  was  paying  perhaps  but  fifty  dollars  a  week  for 
the  money  which,  in  twelve  hours  only,  had  brought 
him  the  clean  sum  of  one  hundred  and  fifty  thousand 
dollars. 

Here  we  have  an  extension  of  the  margin  to  its  sub- 
tlest degree.  The  fifty  dollars  of  interest,  together  with 
the  borrower's  credit,  enabled  him  to  command  thirty- 
seven  thousand  dollars ;  this  again  secured  the  tempo- 
rary control  of  ten  times  that  amount,  and  the  turn  of 
the  market  not  only  cancelled  every  dollar  of  obligation, 
but  created  an  immense  new  capital.  Such  a  chain  of 
fortuitous  circumstances  is  rare,  but  any  broker  who 
has  grown  old  in  the  street  can  recall  very  many  inci- 
dents on  a  minor  scale  of  similar  disproportion  between 
the  risk  and  the  profit. 

The  principle  of  the  margin,  probably  the  outgrowth 
of  a  legitimate  desire  to  make  use  of  the  force  of  credit 
in  ordinary  stock  transactions  where  the  final  object  was 


investment,  is  now  the  mainspring  of  speculation.  Even 
in  the  case  of  what  may  be  styled,  for  the  sake  of  dis- 
tinction, solid  purchases  or  sales,  there  is  clearly  an 
opportunity  for  availing  one's  self  of  the  rise  and  fall  of 
the  market.  In  July,  1867,  the  shares  of  the  Panama 
Eailroad  sold  for  256 ;  in  September,  for  300.  The  dif- 
ference of  $  44  on  each,  certificate  could  have  been  pro- 
cured just  as  well  by  buying  out  and  out,  as  by  paying 
in  only  an  instalment.  Nor  is  there  any  dissimilarity 
between  the  conditions  of  purchase  in  complete  and  in 
marginal  transactions.  Supposing  a  customer  be  always 
lucky  enough  to  buy  lower  than  he  sells,  the  margin 
enables  him,  if  he  operates  on  comparatively  stable 
securities,  to  purchase  in  ten  per  cents  just  ten  times 
what  he  could  otherwise  obtain,  and  thus  make  an 
equivalent  increase  in  gains.  If  he  be  prudent,  his 
margins  will  never  be  his  whole  property ;  and  he  will 
be  prepared  to  make  good  the  losses  by  fluctuations.  As 
long  as  the  man  who  thus  acquires  a  thousand  shares 
at  par,  conscientiously  intends  to  add  to  his  $10,000 
$  90,000  more  if  occasion  demands  it,  he  is  engaged  in  a 
business  no  more  speculative  than  purchasing  real  estate 
on  mortgage. 

The  application  of  the  margin  to  lona  fide  sales  is  less 
easy  to  comprehend,  although  it  is  really  identical  with 
purchases.  A  capitalist  wishes  to  dispose  of  a  thousand 
shares  of  a  certain  company  at  ruling  prices,  but  cannot 
deliver  them  for  thirty  days.  His  broker  would  consent 
to  do  it  upon  the  condition  that  ten '  or  twenty  per  cent 
of  the  par  value  should  be  placed  upon  deposit,  and  that 


60  MEN  AND   MYSTERIES   OF  WALL   STREET. 

this  margin  should  be  increased  in  the  event  of  an  up- 
ward fluctuation.  The  necessity  of  money  in  this  case 
will  be  apparent  when  the  reader  considers  the  problem 
before  the  broker.  His  order  is  to  sell  at  "  ruling  prices." 
The  stock  might,  for  example,  be  Hudson;  say  1,000 
shares,  worth,  on  the  day  the  customer  comes,  just  par. 
It  can  be  sold  either  cash,  regular,  or  on  an  option.  If 
sold  on  a  thirty  days'  seller's  option,  then  the  risk  of  the 
broker  lies  in  the  possibility  of  his  customer's  failing  to 
deliver  the  stock  at  the  time  agreed  upon.  It  may  be  in 
London  or  San  Francisco.  The  steamer  may  founder, 
there  may  be  an  accidental  delay,  the  property  may  be 
attached  by  sheriff's  officers ;  there  'are  a  hundred  con- 
tingencies. But  the  broker  has  pledged  himself  to 
deliver  on  a  fixed  day  ;  he  has,  therefore,  no  alternative 
but  to  go  into  the  market  and  buy,  or,  as  is  commonly 
styled,  "buy  in."  The  shares  may  cost  110  or  120, 
owing  to  either  an  artificial  or  natural  appreciation  of 
the  security.  In  other  words,  he  must  pay  $  110,000  or 
$  120,000  for  what  he  presently  receives  $  100,000.  The 
object  of  the  margin  is  to  cover  this  excess  in  price  at 
time  of  delivery. 

Again,  the  stock  would  probably  not  have  realized  the 
same  at  option  as  if  sold  cash.  As  the  order  was 
"  ruling  prices,"  the  broker  may  have  felt  bound  to  get 
the  best  rates.  He  therefore  sells  cash  or  regular,  and 
borrows  of  Broker  C  the  shares  which  he  delivers  to 
Broker  B,  who  bought  the  lot  of  him  at  the  Board. 
This  places  him  as  debtor  to  C  for  1,000  shares,  which 
can  only  be  made  good  either  by  his  customer's  keeping 


THE   MACHINEEY   OF   SPECULATION.  61 

to  his  agreement  or  by  "  buying  in "  the  stock.  Here, 
as  in  the  option,  the  margin  protects  against  the  rising 
market. 

Stock  can  almost  always  be  obtained  by  borrowers, 
either  flat,  i.  e.  with  no  interest  on  either  side,  or  with 
interest  at  market  rates  for  the  money  advanced  to  the 
lender.  In  options,  six  per  cent  goes  to  the  seller.  The 
broker  in  the  above  transaction,  therefore,  charges  his 
customer  nothing  on  the  difference  between  margin  and 
selling  rate.  Seven  per  cent  is  generally  allowed  on 
margins,  as  well  in  sales  as  in  purchases.  The  six  per 
cent  interest  on  sales  on  option  goes  to  the  customer ; 
but  where  the  sale  is  made  for  cash,  and  the  broker 
borrows  the  stock,  any  interest  he  may  get  is  his  per- 
quisite as  a  compensation  for  the  trouble  and  risk  in 
borrowing. 

As  a  matter  of  fact,  the  use  of  the  margin  is  even  less 
frequent  in  solid  sales  than  in  solid  purchases ;  but  it  is 
highly  important  that  the  underlying  principle  of  this 
magnificent  instrument  of  speculation  should  be  rightly 
apprehended.  Every  conceivable  transaction  of  Wall 
Street  is  based  upon  the  presumption  of  an  amount  of 
actual  capital  equal  to  that  which  figures  in  the  bargain. 
The  mahogany  may  be  veneering ;  but  it  is  always  genu- 
ine wood  so  far  as  it  goes.  Brokers  take  commission  on 
sum  totals,  and  interest  on  sum  totals.  If  they  sell 
billions  of  stock,  they  actually  deliver  it ;  if  they  buy 
billions,  they  pay  over  every  dollar  for  which  they  have 
contracted.  We  shall  presently  consider  more  at  large 
the  immense  expansive  power  of  money  as  applied  to 


62  MEN  AND   MYSTERIES   OF  WALL   STEEET. 

speculation ;  but  it  may  not  be  undesirable  at  this 
juncture  to  reconsider  the  modus  operandi  of  stock- 
dealing  with  reference  to  the  general  public.  The  ex- 
planations of  this  chapter  cover  all  the  main  features 
of  buying  or  selling,  whether  the  object  be  for  invest- 
ment or  speculative.  In  any  case  whatsoever,  where 
stock  is  purchased  or  disposed  of,  the  broker  buys  or 
sells  either 

Cash, 

Regular  "Way, 
Buyer's  Option,  or 
Seller's  Option. 
And  demands  of  his  customer  either 

Solid  deposit  of  money  or  stocks,  or  marginal 
deposit   of  money;    the    margin    to   be   ten, 
twenty,  or  even  forty  per  cent  of  the  par  value 
of  the  stock,  and  to  be  increased  in  proportion 
to  any  subsequent  change  of  the  market ;  —  in 
sales,  where  the  price  of  the  security  advances ; 
in  purchases,  where  the  price  falls. 
Seven  per  cent  a  year  is  generally  allowed  on  all 
margins  advanced  by  customers. 

If  the  transaction  be  either  cash,  regular,  or  a  three 
days'  option,  it  implies  no  interest. 

If  it  be  more  than  a  three  days'  option,  six  per  cent  on 
the  selling  value  of  the  stock  is  paid  by  buyer  to  seller. 

If  the  stock  is  bought  by  the  broker  on  a  given  day, 
and  held  for  the  customer  until  he  is  ready  to  take  it  or 
sell  it,  the  former  charges  seven  or  even  a  higher  per 
cent  for  the  difference  between  cost  and  margin,  this 


THE   MACHINERY   OF   SPECULATION.  63 

interest  continuing  from  the  day  of  purchase  to  the  date 
of  closing  the  transaction.  The  broker,  in  such  cases, 
"  carries  "  the  stock. 

In  sales,  no  interest  is  charged  to  the  customer,  while 
he  is  always  credited  with  interest  on  margin ;  and,  if 
the  operation  be  by  options,  he  is  entitled  to  six  per 
cent,  in  addition,  on  the  difference  between  selling  price 
and  margin.  With  regard  to  this  latter  point,  however, 
usage  differs. 

Furthermore,  the  broker  requires  one  quarter  of  one 
per  cent  on  the  par  value  of  securities  in  case  of  solid 
purchase  or  sale,  or  one  half  of  this  where  stock  is 
bought  or  sold  on  margin;  these  conditions  being  obli- 
gatory "  where  no  agreement  is  made  to  the  contrary." 


64  MEN  AND  MYSTERIES  OF  WALL  STREET. 


CHAPTEE  V. 

MARGINS  AND  THE  LOAN  MARKET. 

THE  moralists  of  this  and  recent  generations  have 
been  much  concerned  over  what  are  called  the 
speculative  tendencies  of  the  world,  and  an  opinion  is 
abroad  that  in  this  particular  the  old  days  were  better 
than  our  own.  A  broker  of  the  writer's  acquaintance, 
who  has  a  penchant  for  geology,  claims,  to  the  contrary, 
that  mankind,  since  the  beginning  of  things,  has  been 
doing  a  vast  amount  of  business  on  a  very  thin  margin 
indeed ;  and  proves  his  point  by  stating  the  miles  total 
of  the  earth's  diameter  and  the  total  of  furlongs  making 
up  the  tenuous  crust  which  keeps  us  all  from  instan- 
taneous and  fiery  liquidation.  The  illustration  is  quaint 
enough,  and  not  so  very  illogical.  For  the  gist  of  all 
credit  is  that  the  creditor  has  something  to  stand  on. 

Take  that  eminently  sound  and  responsible  debtor, 
Great  Britain.  It  has  succeeded  in  borrowing  some  four 
billion  dollars  on  a  margin  of  not  quite  four  per  cent. 
This  margin  is  put  up  anew  each  year,  and  the  weight 
of  consols  is  "  carried  "  with  an  astonishing  freedom  from 
fluctuations.  At  bottom,  this^mountain  of  credit  has  not 
the  substance  of  whipped-syllabub.*  It  is  made  up  of 

*  Soame  Jenyns  neatly  stated  the  case  when  he  characterized  the  dif- 
ference between  laying  out  money  in  land  and  investing  it  in  funds,  as 


MARGINS   AND   THE   LOAN   MARKET.  65 

notes  issued  by  generations  dead  and  buried,  and  in- 
dorsed by  a  small  minority  of  the  living  population, 
called  the  governing  power.  To  collect  this  debt,  the 
only  process  possible  is  by  what  has  always  excited  a 
shudder  in  the  English  citizen,  whether  it  has  taken 
place  in  classic  or  modern  times.  That  process,  which 
no  army  in  Christendom  is  strong  enough  to  enforce,  is 
called  "  universal  confiscation."  There  is  about  as  much 
likelihood  of  this  occurring  as  of  the  earth's  crust  break- 
ing through.  What,  then,  keeps  up  British  consols  ? 
Simply  a  confidence  in  the  national  honor,  and  the  clear 
fact  that  England  owns  more  than  it  owes.  The  answer 
is  sufficiently  trite,  but  it  embodies  the  principle  which 
lies  at  the  base  of  all  modern  finance.  It  is  the  ground- 
work of  banking,  the  main-spring  of  commerce,  the  pivot 
around  which  the  vast  system  of  European  and  American 
speculation  revolves. 

Enter  any  broker's  office  in  Wall  Street.  You  have 
greenbacks  and  give  an  order.  There  is  not  a  respect- 
able broker  in  all  that  money  quarter  who  will  exe- 
cute your  commission  even  for  ninety  cents  on  the  dollar, 
unless  you  are  properly  introduced  and  your  responsi- 
bility vouched  for.  Establish  a  definite  credit,  and  you 
may  be  able  to  buy  the  equivalent  of  a  thousand  dollars 
on  a  deposit  of  fifty.  The  nine  hundred  and  fifty  dollars 
represent  the  certainty  that  you  are  not  only  willing  to 

consisting,  in  the  first  instance,  of  principal  without  interest,  and,  in  the 
other,  of  interest  without  principal.  The  delicate  satire  upon  the  dis- 
advantages of  English  real  estate  will  be  less  appreciated  by  the  Amer- 
ican reader  than  the  other  point  in  the  definition. 


66  MEN  AND  MYSTERIES   OF  WALL   STREET. 

meet  your  obligations,  but  that  you  have  the  ability  to 
do  so.  What  you  pay  down  is  called  margin ;  but  be- 
hind it  lies  your  whole  fortune.  There  is  not  an  opera- 
tion in  the  whole  history  of  stock  speculation  that  did 
not  start  with  just  such  a  background.  The  thinnest 
one  per  cent  margin,  allowed  by  personal  friendship, 
and  coupled  with  the  understanding  that  if  the  market 
should  fall  below,  no  subsequent  claim  should  be  made 
against  the  customer,  must  some  way,  in  valid  manner, 
through  broker's  credit  and  the  subtleties  of  stock,  repre- 
sent behind  it  ninety-nine  per  cent  of  the  selling  value 
of  the  shares  before  the  machinery  of  speculation  will 
touch  it.  To  the  outside  world  this  statement  may  ap- 
pear as  mystical  as  the  Swedenborgian  theology ;  but  its 
truth  will  become  manifest  as  we  advance.  Preliminary 
to  a  further  inquiry  into  this  feature  of  speculation, 
however,  it  is  essential  to  understand  the  phenomena  of 
the  loan  market. 

Out  of  all  the  incorporated  banks  in  the  United  States, 
there  are  thirty  situated  in  Wall  Street  and  its  neighbor- 
hood, whose  office  is  not  unlike  that  of  the  heart  in  the 
economy  of  animal  life.  Although  less  than  half  the 
full  number  of  banks  in  the  metropolis,  these  thirty  have 
two  thirds  of  the  capital,  and  quite  two  thirds  of  the 
circulation.  By  a  provision  of  statutory  law,  all  outside 
National  banks,  numbering  some  sixteen  hundred,  are 
allowed  to  keep  one  half,  and  many  three  fifths,  of  their 
reserve  balances  in  New  York.  In  this  way  our  great 
financial  centre  is  rapidly  acquiring  the  function  of  a 
National  clearing-house.  These  temporary  deposits  bear 


MARGINS   AND   THE  LOAN   MARKET."  67 

a  small  interest,  and  are  subject  to  be  called  for  at  a 
day's  notice.  They  can  only  be  used,  therefore,  by  the 
employing  banks  on  the  same  conditions.  The  stock 
market  supplies  these  conditions.  Bonds  and  shares 
bought  to-day  and  sold  to-morrow,  endowed  with  all 
the  properties  of  swift  conversion,  and  held  by  men 
whose  training  has  been  one  of  incessant  grappling  with 
the  new  and  unexpected,  are  the  only  class  of  property 
upon  which  money  can  safely  be  borrowed  without  a 
protection  against  sudden  demands.  *0n  these  securities, 
therefore,  the  down-town  banks  make  call  loans.  The 
name  implies  the  nature.  The  money  which  the  thirty 
receive  from  without,  together  with  their  own  reserves,  is 
lent  freely  to  stock-brokers,  with  the  simple  provision  that 
it  must  be  returned  immediately  upon  notice,  if  financial 
exigencies  require  it.  This  vast  volume  of  what  may 
well  be  styled  fluid  wealth  is  difficult  of  estimate  in  fig- 
ures. The  published  statements  of  loans  made  by  city 
banks  make  no  distinction  between  discounts  of  commer- 
cial paper  and  what  is  advanced  on  securities.  In  sum 
total,  the  thirty  banks  lend  weekly  about  $  165,000,000. 
Indeed,  including  all  New  York  banks,  the  average  is 
nearly  $  255,000,000.  During  the  week  ending  Septem- 
ber 18,  1868,  these  banks  lent  $266,496,024.  The  real 
meaning  of  these  last  figures  will  be  better  understood 
when  it  is  known  that  they  exceed  the  entire  average  loans 
and  discounts  of  all  the  national  banks  of  New  England 
and  New  York  State,  with  the  exception,  of  course,  of  the 
city  itself.  Or,  to  take  a  more  sweeping  view,  they  sur- 
pass the  total  weekly  loans  of  national  banks  in  Mary- 


68  MEN  AND   MYSTERIES 'OF  WALL   STKEET. 

land,  Virginia,  North  Carolina,  South  Carolina,  "West  Vir- 
ginia, Georgia,  Alabama,  Texas,  Arkansas,  Kentucky,  Ten- 
nessee, Ohio,  Nebraska,  Kansas,  Missouri,  Minnesota, 
Iowa,  "Wisconsin,  Illinois,  Michigan,  Indiana,  Delaware, 
and  New  Jersey.  Nigh  one  hundred  and  eighty  millions 
of  the  amount  cited  above  were  advanced  by  the  down- 
town banks.  What  proportion  of  this  was  lent  on  stocks  ? 
Probably  much  over  one  third.  As  many  of  the  other 
banks  also  make  call  loans,  we  may,  perhaps,  estimate 
that  from  seventy*  to  one  hundred  million  dollars  are 
furnished  daily  to  the  brokers  and  operators  of  New 
York. 

This,  however,  is  but  one  element  in  the  lending  force 
of  the  city.  There  are  five  Trust  Companies,  with  capi- 
tals amounting  in  the  aggregate  to  five  millions  and  a 
half,  which  lend,  at  times,  sixty  millions  a  week.  There 
are  also  a  great  number  of  private  banking-houses,  of 
which  Jay,  Cooke,  &  Co.  may  be  selected  as  representa- 
tives, that  daily  loan  vast  sums  of  money  on  security. 
The  foreign  houses  alone,  which,  like  Belmont  &  Co., 
Brown  Brothers,  Drexel,  "Winthrop,  &  Co.,  operate  in 
Wall  Street,  employ  not  much  less  than  two  hundred 
million  dollars  of  capital. 

On  this  ocean  of  wealth,  fed  by  tributary  streams 
which  flow  from  all  America  and  ripple  up  from  the 
far-off  European  capitals,  along  the  strands  of  deep-sea 
cables,  the  fleets  of  the  stock  market  ride  with  such 
security  as  is  the  luck  of  mariners  the  world  over.  For 
money,  selected  by  mankind  as  the  gauge  of  all  values 
on  account  of  its  exceeding  stability,  has  nevertheless  its 


MARGINS  AND  THE  LOAN   MARKET.  69 

whirls  and  eddies,  its  calms  and  tempests,  its  heave  and 
swell.  To-day  men  will  loan  millions  at  four  per  cent. 
To-morrow  it  cannot  be  had  for  twice  or  thrice  that  pay- 
ment. A  certain  degree  of  order,  however,  attends  these 
fluctuations.  In  general,  the  money  market  may  be  said 
to  be  subject  to  periodic  influences  covering  whole  months, 
and  repeating  themselves  year  by  year  at  nearly  the  same 
seasons.  In  spring  and  fall  the  crops  are  to  be  brought 
forward.  Merchants  need  money.  Those  who  have 
securities  hypothecate  them  if  they  can ;  and  sell,  if 
they  cannot  borrow.  Hence  a  universal  call  on  banks 
and  bankers,  the  tide  of  interest  rising  higher,  and  the 
amount  of  individual  advances  lessening  in  quantity  and 
proportion.  The  financial  chroniclers  announce  that 
money  is  "very  active,"  and  the  loan  market  "strin- 
gent." 

In  midsummer  the  atmosphere  changes.  A  tropical 
calm  succeeds  the  trade-winds.  The  lender  seeks  the 
borrower.  Money  becomes  a  drug.  Technically  it  is 
"easy"  or  "inactive."  Then  the  broker  can  borrow 
more,  and  will  have  to  pay  less,  than  at  any  other  season. 
Both  these  periods  are  subject  to  temporary  cross  cur- 
rents, and  in  some  years  there  seems  to  be  no  law  what- 
ever to  the  fluctuations.  In  one  form  or  another,  how- 
ever, these  two  conditions  are  unfailing  facts,  and  all 
stock  speculation  depends  upon  them. 

For  it  cannot  too  frequently  be  iterated,  that  specula- 
tion means  solid  money.  There  cannot  be  a  solitary 
transaction  except  upon  this  basis.  Every  departure 
from  this  principle  flings  the  gates  wide  open  to  failure. 


70  MEN  AND   MYSTERIES 'OF  WALL   STREET. 

Now  the  groundwork  of  a  purchase  of  stock  is  the  cus- 
tomer's margin,  the  broker's  capital,  and  the  borrowing 
capacity  of  the  security.  The  last  of  these  three  elements 
is  the  one  which  must  be  fully  known,  before  the  risk 
can  be  calculated. 

Entering  the  loan  market  we  find  that  the  securities 
dealt  in  by  the  stock  exchange  classify  according  to  de- 
scription and  value  for  loans  very  much  as  follows :  — 

COLLATERALS.  ON  WHICH  MONEY  is  LENT 

Governments,  gold-bearing  State  bonds, 


railroad  bonds  not  open  to  question, 
bank  shares,  and  generally  all  high- 
valued  scrip  held  mainly  for  invest- 
ment. 

Speculative  stocks  that  average  high  ' 
dividends,  and  have  an  investment 
value,  although  heavily  dealt  in  by 
operators. 


At  par,  or  within  10 
per  cent  of  selling 
value. 


Within  10  or  20  per  cent 
of  selling  value. 


Wholly  speculative  stocks,  usually  called  )  Within  20  or  30  per  cent, 
"fancy,"  and  of  nominal  real  value.     /      if  at  all. 

This  table  necessarily  implies  a  steady  value  in  the 
securities.  If,  as  not  seldom  happens  from  special  causes, 
a  stock  sinks  in  selling  worth  after  a  loan  is  effected, 
the  lender  at  once  calls  in  his  money,  or  requires  a  fur- 
ther advance  of  stock  equal  to  the  percentage  of  depre- 
ciation. How  the  machinery  works  practically  can  be 
best  shown  by  an  example. 

Suppose  a  firm  of  brokers  to  have  a  customer,  A,  who 
desires  to  deal  very  largely  in  a  particular  stock  upon 


MARGINS  AND   THE   LOAN   MARKET.  71 

which  a  loan  can  be  effected  within  five  per  cent  of  par, 
the  selling  price  being  110.  Wishing  to  accept  the 
whole  order,  and  believing  that  the  stock  could  not  pos- 
sibly fall  below  five  per  cent ;  they  agree  to  buy,  on  a 
ten  per  cent  margin,  twenty  thousand  shares.  Their 
capital  is  so  far  in  use  that  they  can  only  employ  in  the 
transaction  $100,000.  The  order  requires  $2,200,000. 
They  accomplish  it  as  follows :  — 

Bought  20,000  shares  @  110,  $2,200,000 
Paid  for  it  by 

Hypothecation  of  20,000  shares  @  95,   .    $  1,900,000 
Customer's  margin,    ....  200,000 

Broker's  capital, 100,000 

$2,200,000 

If  the  market  sinks  five  per  cent,  the  entire  capital  at 
command  of  the  brokers  instantly  disappears.  If  it  sinks 
six  per  cent,  they  are  bankrupt.  This  bankruptcy  may 
not  appear  because  the  banks  may  not  call  in  their  loan. 
Even  at  six  per  cent  depreciation  they  hold  securities 
valued  according  to  the  market  price  at  $  2,080,000. 
The  possibilities  of  a  fall  we  shall  presently  consider. 
At  this  point  we  wish  to  call  the  reader's  attention  to 
the  great  amplitude  of  credit  open  to  brokers. 

The  firm  in  question  had  placed  on  deposit  at  their 
bank  the  customer's  margin  and  their  entire  capital 
When  the  purchased  stock  was  presented,  they  gave 
checks  for  $2,200,000,  which  their  bank  certified,  al- 
though there  were  but  $  300,000  to  show  for  it,  and  they 
could  not  make  this  temporary  deficit  good  until  they  had 
received  the  $  1,900,000  as  a  loan  on  their  collaterals. 


72  MEN  AND  MYSTERIES  OF  WALL   STREET. 

The  running  scale  of  their  credit,  starting  with  the 
solid  basis  of  $  100,000,  might  be  thus  stated :  — 

1st.    As  margin,  $  200,000.     (Customer's  confidence.) 

{« i  onn  nnn  /  of  certified  checks  based  uPon  noth- 
ij>  i,yuu,uuu  v     •     i  cj 

I      ing  but  confidence. 
1,900,000  lent  on  stock. 
200,000  margin. 

3d   tao-       /   $  1,900,000  lent  on  stock. 
I         200,000  margin. 

The  condition  of  credit  at  the  second  stage  will  appear 
more  forcibly  by  the  subjoined  diagram :  — 


$200,000.      Margin. 


$  100,000.)  Foundation  Stone. 


MARGINS   AND   THE  LOAN  MARKET.  73 

The  bank  credit  through  certified  checks  is  really  the 
only  weak  point  in  this  pile  of  values.  That  existed 
merely  for  an  hour  or  two,  and  was  safe  enough,  if  we 
regard  the  results  of  experience.  The  assertion  may 
confidently  be  hazarded,  that,  taking  known  facts,  the 
risks  of  mercantile  houses  in  ordinary  trade  credits,  or 
of  operators  through  fluctuations  of  stock,  are  tenfold, 
if  not  fifty -fold,  that  of  the  banks  in  these  temporary 
daily  credits. 

As  long  as  money  remains  plenty,  the  firm  can  carry 
its  immense  load.  Naturally,  also,  the  buying  public  is 
disposed  to  pay  even  higher  prices  for  stock.  Quite 
possibly  the  shares  may  rise  to  120.  At  this  point,  if 
sale  is  effected,  there  must  be  a  renewal  of  the  credit  by 
certified  checks.  A  has  made  a  gross  profit  of  $  200,000. 
The  brokers,  at  one  eighth  of  one  per  cent  commission, 
would  receive  $  5,000,  and  they  would  also  gain  in  the 
difference  between  the  percentage  on  which  they  "  car- 
ried "  the  stock,  viz.  seven  per  cent,  and  what  they  were 
obliged  to  pay.  They  might  Have  borrowed  at  four  per 
cent  per  annum.  In  1867,  when  the  Treasury  report  for 
April  exhibited  an  expansion  of  currency  to  the  amount 
of  a  million,  call-loans  were  four  per  cent,  and  loans  for 
thirty  days  were  made  readily  for  five  per  cent.  In  in- 
active times,  such  rates  are  by  no  means  infrequent. 

We  have  supposed  an  easy  loan  and  a  buoyant  stock 
market.  It  may  have  chanced,  however,  that  the  shares 
fell,  while  lending  rates  remained  as  before.  The  bro- 
kers, in  such  a  contingency,  demand  that  the  margin  shall 
be  increased  in  proportion  to  the  decline.  The  bank  is 


74 


MEN  AND   MYSTEKIES   OF  WALL   STEEET. 


still  ready  to  lend,  but  not  at  such  liberal  advances, 
the  stock  depreciates  the  loan  is  called  in. 
The  scale  may  be  stated  in  this  manner  :  — 


As 


Stock:  20,000. 
Selling  Rates. 

A's  Margin. 

Broker  Capital. 

Call  Loan. 

Cost  of  20,000. 

110 

{  $  200,000 

$  100,000 

$1,900,000} 

$  2,200,000 

100 

{    400,000 

100,000 

1,700,000} 

2,200,000 

90 

{    600,000 

100,000 

1,500,000} 

2,200,000 

80 

j    800,000 

100,000 

1,300,000} 

2,200,000 

70 

j  1,000,000 

100,000 

1,100,000} 

2,200,000 

60 

j  1,200,000 

100,000 

900,000  } 

2,200,000 

50 

j  1,400,000 

100,000 

700,000} 

2,200,000 

40 

j  1,600,000 

100,000 

500,000} 

2,200,000 

30 

{  1,800,000 

100,000 

300,000  } 

2,200,000 

20 

{2,000,000 

100,000 

100,000} 

2,200,000 

10 

j  2,200,000 

At  every  stage  of  this  descent  it  is  A  who  stands  in 
the  gap.  As  against  the  street,  the  transaction  presents  a 
series  of  intrenchments  in  which  both  A  and  his  brokers 
cover  the  bank,  and  in  which  A  covers  his  brokers  and 
increases  the  defences,  step  by  step,  as  the  danger  becomes 
more  imminent.  The  moment  A's  resources  fail,  the 
brokers  sell.  In  fact,  below  50  or  60  the  whole  illus- 
tration is  pure  hypothesis,  as  at  that  point  neither  broker 
nor  lender  would  have  faith  in  the  security,  and  A  would 
have  to  assume  the  whole  burden  or  relinquish  it. 

"We  have  supposed,  in  the  above  case,  that  the  brokers 
borrowed  from  only  one  bank  and  kept  but  one  bank 
account.  Practically,  however,  such  a  large  loan  would 
be  distributed  through  half  a  dozen  banks  or  Trust  Com- 


MARGINS  AND  THE  LOAN  MARKET. 


75 


panies.  The  usual  method  is  to  place  the  securities  in  a 
long  envelope  with  a  printed  form  on  the  back,  stating 
the  amount  hypothecated,  and  the  money  desired.  Thus, 
if  Black  &  White  have  a  lot  of  Chicago  and  Northwest 
selling  at  70,  Rock  Island  worth  101,  and  Pacific  Mail 
rated  at  48,  on  which  they  wish  to  borrow  within  nine- 
teen or  twenty  per  cent,  they  would  make  up  their 
budget,  enclose  it  in  an  envelope,  and  fill  out  the  blanks 
as  follows :  — 


W  o 

^     CO 


^ 


In  case  the  bank  called  for  more  stock,  on  account  of 
subsequent  depression,  they  would  either  make  up  the 
deficiency  with  other  shares,  or  send  over  another  envel- 
ope with  the  loan  marked  down  to  $  90,000  or  $  80,000, 
proportionate  to  the  decreased  value.  The  former  trans- 
action would  thus  be  closed  up  and  a  new  loan  com- 
mence. 

As  banks  lend  more  freely  to  customers  than  to  out- 
siders, the  great  broker  houses  make  it  a  point  to  keep 
two,  three,  or  even  more  bank  accounts,  proportionate  to 
their  capital.  They  also  endeavor  to  leave  daily  deposits 


76  MEN   AND   MYSTERIES   OF  WALL   STREET. 

of  as  large  an  amount  as  the  exigencies  of  business  will 
allow,  varying  week  by  week,  but  with  an  average  of 
from  twenty  to  a  hundred  thousand  dollars.  It  is  the 
advantage  which  banks  derive  from  these  deposits  of 
non-interest  earning  capital  which  makes  them  willing 
to  certify  checks  to  such  enormous  amounts,  and  to 
accommodate  the  speculative  public  with  loans. 

When  the  loan  market  is  stringent,  the  question  of 
interest  becomes  of  paramount  importance.  Sometimes 
there  is  apparently  no  limit  to  the  rates.  The  city  banks 
halt  at  seven  per  cent,  and  the  moment  money  rises 
above  this,  recourse  must  be  had  to  private  bankers. 
There  is  an  impression,  very- current  among  a  portion  of 
the  mercantile  class,  that  the  banks  profit  directly  by 
the  extra  enhancement  of  interest  rate.  This,  of  course, 
is  a  mistake.  The  law  stands  in  the  way.  But  there  is 
nothing  to  prevent  an  honest  cashier  from  distinguishing 
between  borrowers,  and  lending  open-handed  to  one, 
while  "regretting  the  inability"  of  the  bank  to  assist 
another.  If  the  borrower  happens  to  make  a  "turn," 
and  so  is  able  to  pass  over  an  envelope  to  the  officer 
with  eight  or  twelve  hundred  dollars  in  greenbacks 
slipped  in  for  a  Christmas  present,  what  clause  in  the 
charter  forbids  it  ?  There  is  certainly  some  way  of  bridg- 
ing over  the  chasm  between  "  no  loans  "  at  the  bank  and 
plenty  of  loans  on  "  the  street,"  if  one  be  willing  to  pay 
for  them.  At  all  events  there  are  banking-houses  whose 
capital  is  limited,  but  who  never  appear  to  be  without  a 
free  flow  of  money,  just  when  the  bank  presidents  are 
assuring  brokers  that  it  is  impossible  to  get  it 


MARGINS   AND   THE   LOAN   MAEKET.  77 

When  a  broker  agrees  to  "carry"  stock,  he  says, 
"  Seven  per  cent,  unless  the  market  tightens."  There  is 
a  world  of  meaning  in  those  words.  The  scale  of  rates 
slides  up,  —  seven  per  cent  coin,  seven  per  cent  plus 
commission  of  1-16,  3-16,  5-16.  Even  one  per  cent  will 
be  charged.  This  is  confusion  to  the  uninitiated.  It 
means  simply  that,  besides  the  legitimate  seven  per  cent, 
the  borrower  must  sell  and  then  buy  back  the  stock, 
paying  from  ^  to  l|,  or  one  per  cent  higher,  when 
delivered  the  next  day.  The  men  who  do  this  call  them- 
selves banker  brokers,  and  the  excessive  interest  is  readily 
met  by  dealers  who  have  had  their  securities  thrown 
back  upon  them  by  the  banks,  and  are  compelled  to 
borrow  in  other  quarters  rather  than  risk  the  sacrifice  of 
their  stock  in  a  falling  market.  By  selling  cash  and 
buying  back  regular,  they  obtain  a  day's  respite,  and  in 
the  meanwhile  money  may  become  easier.  After  the 
famous  Black  Friday,  at  which  the  great  gold  "  corner  " 
culminated,  this  one  per  cent  commission  plus  seven  per 
cent  in  coin  per  annum  was  paid  for  a  loan  from  Saturday 
to  Monday,  with  the  highest  class  of  government  bonds  as 
collaterals.  In  many  cases,  when  the  security  was  less 
satisfactory,  a  very  much  higher  percentage  was  charged. 

All  sorts  of  causes  conspire  to  bring  about  this  activity 
of  the  loan  market.  Sometimes  it  is  an  artificial  lock-up 
in  which  bank  directors  form  coalitions  with  great  opera- 
tors, and  withhold  ten  millions  from  use.  A  sub-treasury 
sale  of  gold  may  assist.  The  fact  that  the  New  York 
City  chamberlain  draws  out  three  or  four  millions  from 
the  Broadway  bank,  to  pay  interest  and  part  of  the 


78  MEN  AND  MYSTEKIES   OF  WALL   STREET. 

principal  of  the  municipal  debt,  has  increased  rates  for  a 
day.  The  mere  intensity  of  speculation,  causing  a  bor- 
rowing demand  too  great  for  the  supply,  occasions  it. 
Often  no  possible  explanation  appears,  and  a  stringency 
amounting  to  twelve,  fourteen,  or  sixteen  per  cent  in  a 
forenoon  may  suddenly  relax  by  1  P.  M.,  without  warning 
or  excusa  The  Stock  Board  has  made  vain  efforts  to 
protect  itself  against  these  changes,  and  at  one  time 
greenbacks  were  sold  in  the  Long  Koom,  and  a  Loan 
Office  opened  at  Eegular  Sessions ;  but  it  was  found  that 
this  subterfuge  only  intensified  the  evil 

So  far  as  the  outside  customer  is  affected  by  a  money 
tightness,  the  effect  is  seen  either  in  the  drooping  value 
of  the  stock  speculated  in,  requiring  increase  of  margin 
proportionate  to  the  decline;  or  in  a  heavy  addition  to 
the  interest  charge.  Thus,  an  order  may  have  been  given 
to  Money,  Bonds,  &  Co.,  in  1869,  to  buy  and  carry  a  thou- 
sand shares  of  Rock  Island.  The  middle  of  November 
the  lending  bank  refused  to  continue  its  loan,  owing  to 
the  tightness  of  the  market;  and  the  firm,  having  no 
other  alternative,  resort  to  Smith  &  Jones,  banking 
brokers.  The  latter  agree  to  make  the  accommodation 
for  a  month  at  six  per  cent  per  annum  and  two  per  cent 
commission.  This  neat  profit  is  called  a  "turn."  We 
have  already  alluded  to  it.  Practically,  it  is  an  artifice 
to  avoid  the  hazards  of  the  usury  law,  precisely  as 
fashionable  pawnbrokers  lend  a  hundred  dollars  on  a 
diamond  breast-pin,  and  give  a  paper  which  stipulates 
that  the  holder  can  buy  back  the  property  at  one  hun- 
dred and  ten  dollars  within  a  month.  The  borrowing 


MARGINS   AND   THE   LOAN   MARKET.  79 

stock  firm  sells  the  shares  at  about  ruling  rates,  cash,  and 
then  buys  them  back  at  two  per  cent  higher,  buyer  30. 
Supposing  the  date  of  the  transaction  to  have  been 
November  15th,  they  could  probably  have  received  a 
par  advance,  and  would  have  given  102.  The  sub- 
joined acknowledgment  would  have  been  made  by  the 
borrowing  house. 


QpKj  1,000  Shares.     102,  B.  30. 

NEW  YORK,  November  15,  1869. 

We  have  PURCHASED  of  SMITH  &  JONES  One 
Thousand  (1,000)  Shares  of  the  Capital  Stock  of  the  Chi- 
cago, Rock  Island,  &  Pacific  R.  R.  Co.  at  One  Hundred 
.    and  Two  (102)  per  cent,  payable  and  deliverable,  buyer's 
>>"4  'option,  within  Thirty  days,  with  interest  at  the  rate  of  Six 
;.:..:  z  ^  ^^  ce^  ^&r  annum.    Either  party  having  the  right  to  call 
:....,•  ^  •,....;  for  a  deposit  of  Twenty  per  cent  during  the  pendency  of  this 
U;  Q  kJ  contract.  MONEY,  BONDS,  &  CO. 


Smith  &  Jones,  by  this  transaction,  net  two  thousand 
dollars,  and  a  more  profitable  style  of  operation  is  not  to 
be  found  in  Wall  Street.  » 

Why  did  not  the  customer  of  Money,  Bonds,  &  Co. 
sell  his  stock  by  an  option,  instead  of  "  carrying  "  it  with 
the  risk  of  this  heavy  usury  ?  As  in  such  case  there 
would  be  no  interest  to  pay,  and  if  the  purchase  itself 
had  also  been  made  by  option,  there  would  have  been 
only  six  per  cent  interest,  the  question  is  natural.  One 
reason  is  that  a  buyer's  option  is  usually  much  more 
above  the  market  than  it  would  cost  to  "  carry "  stock, 
while  a  seller's  option  compels  the  purchaser  to  depend 


80  MEN  AND   MYSTEKIES   OF  WALL   STREET. 

upon  the  will  of  another,  and  the  very  opportunity  of 
speculation  may  be  lost.  Per  contra,  if  sold  during  a 
tight  money  market,  less  would  be  made  than  if  the 
high  interest  were  met.  Moreover,  by  carrying  his 
stock,  a  speculator  is  enabled  to  seize  upon  all  sorts  of 
wayside  profits,  and  to  meet  the  fluctuations  of  the 
street  just  at  their  tidal  height.  This  especially  appears 
in  "corners,"  where  a  gain  of  from  twenty  to  fifty  per 
cent  will  disclose  itself  one  day,  and  disappear  the  next. 
The  man  who  "  carries  "  realizes  the'profits  ;  the  one  who 
has  out  a  buyer's  option  must  give  at  least  twenty-four 
hours'  notice,  and  so  loses  the  chance. 


THE   METHODS    OF   SPECULATION.  81 


CHAPTEE    VI. 

THE   METHODS   OF   SPECULATION. 

Qj  OMEBODY  is  always  making  money  in  Wall  Street. 
k5  At  the  Exchange,  the  moment  the  ear  catches 
"  Take  'em/'  "  Sold,"  "  Done,"  we  may  be  sure  that  on 
one  or  both  sides  there  has  been  a  profit  more  or  less 
large.  This  gain  may  not  always  appear,  seeing  that  it 
possibly  covers  some  loss  of  the  future  or  the  past ;  but 
it  is  pleasant  to  believe  in  the  certainty  of  a  good  bar- 
gain either  for  buyer  or  seller.  Moreover,  no  one  specu- 
lates to  lose,  and  in  analyzing  the  modes  of  stock  opera- 
tions, it  is  well  to  look  at  the  sunshine.  "What  are  these 
modes  ?  At  bottom,  only  two.  The  "  street "  condenses 
its  whole  speculative  business  into  a  couple  of  monosyl- 
lables, —  "  long  "  and  "  short." 

If  you  are  long,  you  are  a  "  bull "  ;  if  short,  a  "  bear." 
Much  nonsense  has  been  written  and  a  vast  deal  of 
fanciful  etymology  wasted  over  these  zoological  distinc- 
tions. Their  real  origin  is,  probably,  like  all  other 
broker  metaphors,  due  to  a  pungent  conception  of  facts. 
If  a  bear  finds  anything  in  his  rural  peregrinations, 
whether  it  be  a  turkey  on  the  roost  or  a  man  in  a  tree, 
he  lifts  his  paw  and  pulls  it  "down.  The  bull,  on  the 
contrary,  lowers  his  head  only  to  give  men  and  things  a 

decided  upward  tendency. 

4* 


82  MEN   AND   MYSTERIES   OF  WALL   STREET. 

The  application  of  these  habits  to  speculative  phe- 
nomena is  too  obvious  to  need  explanation.  Bull  opera- 
tors take  a  stock  at  its  lowest,  and  attempt  to  toss  it  up 
as  high  as  may  be.  The  bears,  on  the  other  hand,  prefer  to 
pull  values  down  to  the  lowest  possible  figure.  Believ- 
ing that  prices  are  too  high,  they  sell,  and  are  therefore 
"  short,"  precisely  as  people  who  have  disposed  of  their 
money  are  "  short "  of  change.  The  bull  buys,  confident 
that  stocks  will  be  higher,  and  is  said  to  be  "  long,"  pos- 
sibly because  this  word  is  the  opposite  of  "  short,"  possibly, 
also,  as  suggestive  of  the  dimensions  of  his  purse. 

Into  these  two  classes  all  the  speculators  who  are  the 
life  of  Wall  Street,  are  divided.  But  the  epithets  are 
temporary  rather  than  permanent.  There  are  men,  in- 
deed, who  are  constitutionally  hopeful,  —  always  looking 
for  a  rise ;  and  others  who  equally  disbelieve  everything, 
and  invariably  sell  down  the  market.  The  vast  majority, 
however,  alternate  from  bull  to  bear  and  from  bear  to 
bull,  according  to  the  speculative  outlook.  Curiously 
enough,  the  dialect  of  "  the  street "  —  prolific  almost,  to 
distraction  in  the  language  of  buying  and  selling,  in  the 
nicknames  of  the  various  orders  of  brokers,  and  in 
phrases  descriptive  of  pure  jobbery  —  is  exceedingly  poor 
in  words  which  tersely  define  the  different  methods  by 
which  operators  make  money  in  stocks.  The  thing  is 
present,  but  the  name  is  wanting.  There  are  a  hundred 
different  methods  of  dealing  the  cards,  but  the  play  is 
either  "  long  "  or  "  short."  When  there  are  high  stakes, 
it  is  "  cornering."  When  one  bets  on  the  players,  it  is  a 
"  call "  or  a  "  put."  Beyond  this,  for  the  infinite  permu- 


THE   METHODS   OF   SPECULATION.  83 

tations  and  combinations  which  street  transactions  allow, 
the  imagination  and  ingenuity  of  brokers  are  sadly  at  fault. 
The  first  element  in  speculation  is  the  "  point."  If 
the  operator  has  a  good  "  point,"  he  has  a  "  sure  thing." 
This  valuable  acquisition  is  something  like  the  advan- 
tage of  placing  your  opponent  with  his  back  to  a  mirror. 
You  see  both  hands.  In  other  words,  the  "  point "  is  a 
bit  of  secret  information  concerning  a  stock,  whether  it 
be  that  an  extra  dividend  is  to  be  declared,  a  bull  move- 
ment is  organizing,  an  emission  of  new  shares  is  to  take 
place,  or  some  other  cause  is  at  work,  or  likely  to  be  at 
work,  which  will  seriously  affect  prices.  According  to 
this  knowledge  you  buy  or  sell,  and  if  you  have  not  been 
misled,  you  are  certain  to  make  in  proportion  to  your 
venture.  "Wall  Street  is  full  of  these  "points."  The 
Stock  Exchange  is  paved  with  them.  There  is  a  certain 
other  place  floored  with  good  intentions,  and  where,  if 
one  stumbles,  he  burns  his  fingers.  Points  frequently 
have  this  quality.  To  understand  this  very  completely, 
the  reader  should  comprehend  that  beautiful  problem  in 
stock  chess  which  we  will  call 

THE  DREW   GAMBIT. 

A  great  man,  with  vast  heaps  of  money  made  by 
gathering  bulls  and  other  cattle  for  the  slaughter-house, 
one  day  gets  possession  of  nearly  the  whole  of  the  capi- 
tal stock  of  the  celebrated  E.  Eye  Eailroad.  Looking 
around  him  he  sees  a  neighbor  with  a  small  purse,  and 
whispers  "  Buy."  Straightway  this  neighbor,  whom  we 
may  as  well  name  Trustful,  does  buy,  and  his  thousands 


84      MEN  AND  MYSTERIES  OF  WALL  STREET. 

become  ten  thousands.  Then  after  some  days  the  low 
voice  sibillates  "  sell " ;  and  TrustfuTs  ten  thousands 
turn  to  hundred  thousands.  So  the  neighborly  good 
work  continues  until  the  benefactor  of  mankind  has 
enabled  his  protfyt  to  surround  himself  with  all  the 
glories  of  sudden  wealth,  and  to  proudly  read  in  his 
bank-book  those  delightful  Arabic  signs  whose  interpre- 
tation is  half  a  million.  This  sum  Trustful  has  acquired, 
not  directly  from  his  patron,  but  through  the  losses  of 
other  operators. 

One  day  the  great  man,  having  tired  of  E.  Rye,  deter- 
mines to  shake  himself  loose  from  the  burden.  Trustful 
comes  and  asks  for  a  point.  "With  mysterious  nods  and 
knowing  looks  he  is  told  that  a  broad-gauge  road  is 
always  a  good  purchase,  —  in  fact,  there  never  was  a  time 
when  one  could  buy  at  such  great  advantage  as  now. 
Forthwith  Trustful  goes  into  the  market  and  spreads  his 
half  million  in  thin  margin  over  the  whole  street,  buy- 
ing and  buying.  The  more  he  takes  the  more  is  sup- 
plied him.  Presently  he  can  buy  no-  longer,  and  the 
stock  strangely  falls.  His  margins  are  washed  away.  A 
sea  of  debt  sweeps  over  him.  The  magnificent  lord  of 
E.  Rye  has  "  sold  out "  his  stock  and  his  neighbor !  The 
world  shrugs  its  shoulders,  as  it  bows  to  the  king  of  the 
shorts,  whose  ways  are  ways  of  cleverness,  and  whose 
"  points  "  are  moral  guide-boards. 

If  rumor  be  veracious,  old  Captain  Hancock,  of  the 
famous  Troy  line  of  steamboats,  once  played  out  this 
game  sc  as  to  checkmate  the  king.  The  story  is  worth 
telling,  as  showing  that  the  "gambit"  is  not  always 


THE   METHODS   OF   SPECULATION.  85 

safe.  The  Captain  had  a  friend  named  Daniel,  who  had 
helped  him  by  various  "  points,"  until  he  was  one  of  the 
mighty  magnates  of  the  money  quarter.  One  day,  how- 
ever, this  friend  advised  him  to  buy  all  the  stock  of  the 
great  Blank  Railroad  he  could  possibly  carry.  Hancock 
did  buy  in  blocks  of  five  thousand,  risking  about  all  the 
wealth  he  was  master  of.  A  lucky  accident  revealed  to 
him  that  Daniel,  through  his  brokers,  Largebeak  &  Co., 
had  been  selling  the  stock  upon  him.  When  the  clerk 
of  the  firm  brought  the  shares  and  asked  for  payment, 
Hancock  gave  a  check  for  the  full  amount,  but  notified 
his  bank  not  to  cash  it.  Presently  back  comes  the  clerk, 
full  of  indignation,  declaring  that  the  check  is  worthless, 
and  demanding  the  return  of  the  shares. 

The  Captain,  however,  in  the  mean  time  had  walked 
over  to  Largebeak  &  Co.'s,  and,  entering  the  private 
office,  found  Daniel  comfortably  seated  at  a  desk.  After 
a  very  brief  preliminary,  Hancock  went  straight  to  his 
work.  He  had  been  persuaded  to  buy  a  big  load  of 
this  infernal  Blank  Kailroad.  He  had  bought  of  several 
parties  ;  among  them,  it  appeared,  of  Largebeak.  Blank 
had  gone  down.  Daniel  had  deceived  him,  and  tried  to 
"  wipe  him  out."  "  Now,  then,  I  have  this  lot  of  Large- 
beak's,  and  will  keep  it,  if  I  have  to  spend  every  dollar 
left  in  the  courts,  unless  you  agree  to  take  back  all  you 
sold  on  me."  Having  said  this,  he  turns  upon  his  heel 
and  retires.  Then  the  brokers  and  their  client  contem- 
plate the  situation.  Largebeak  &  Co.  naturally  object  to 
the  loss  of  some  ten  thousand  shares,  and  call  Daniel's 
attention  to  the  awkwardness  of  litigation.  The  sequel 


86  MEN  AND   MYSTEEIES   OF  WALL   STREET. 

of  the  whole  matter  is  that  Hancock  gets  rid  of  all  his 
Blank,  saves  his  fortune,  and  thenceafter  seeks  his  points 
in  other  quarters. 

It  should  not  be  inferred,  however,  that  there  is 
always  an  intention  to  lead  astray,  even  when  a  specu- 
lation, founded  on  hints  of  this  nature,  results  badly. 
In  fact,  half  the  failures  of  the  street  are  due  to  points 
which  brokers  believe  in,  not  only  to  their  customers' 
but  their  own  ruin.  Apart  from  the  operations  based 
upon  secret  intelligence,  there  are  a  variety  of  combi- 
nations that  are  certain  of  profit  if  well  managed.  Of 
these,  the  prettiest  is 

THE  TURN. 

In  a  previous  chapter  we  illustrated  this  as  applied  to 
loans.  Its  application  is  similar  in  regular  transactions. 
Thus,  occasionally,  during  a  day's  fluctuations,  an  opera- 
tor can  buy  a  stock  at  90,  buyer  30,  and  seU  it  off  at  92, 
seller  30.  But  these  opportunities,  however  sure  when 
the  chances  allow  it,  are  apt  to  be,  like  white  black- 
birds, not  over  common.  One  modification  of  this  is  the 
Spread  Eagle,  formerly  a  highly  popular  style  of  specu- 
lation with  capitalists  who  had  plenty  of  money  and  a 
wide-awake  broker.  Its  method  was  delightfully  simple. 

An  operator,  A,  buys  5,000  Northwestern  of  B  at  84, 
seller  30,  and  sells  it  to  C  at  85,  buyer  30. 

The  fluctuations  and  rivalry  of  the  market  continually 
afford  opportunities  for  combinations  of  this  kind,  and 
brokers  can  frequently  close  with  simultaneous  offers 
and  bids  answering  to  all  the  conditions  of  this  specu- 


THE   METHODS   OF   SPECULATION.  87 

lation.  The  gist  of  the  transaction  is  apparent  on  the 
face.  A  sells  higher  than  he  buys,  and  is  enabled  to  do 
this  readily  by  making  the  options  to  the  advantage  of 
both  parties  with  which  he  deals.  His  profit  in  every 
case  will  be  the  difference  between  buying  and  selling 
price  ;  and  the  premium  on  options,  as  well  as  the  varia- 
tions in  all  stock,  would  not  seldom  permit  of  a  larger 
margin  of  gain  in  the  sale.  He  must  be  prepared  to  take 
the  stock  when  it  is  delivered,  and  provide  the  stock 
when  demanded.  At  the  end  of  the  thirty  days,  sup- 
posing both  the  contracts  fulfilled,  A  will  have  made  one 
per  cent,  or  $  5,000. 

The  danger  of  this  operation  is  in  a  sharp  upward  and 
then  a  downward  turn  in  the  market.  If  the  stock 
should  rise  to  100,  C  would  at  once  make  a  demand  for 
the  stock,  and  A  must  buy  again  at  the  high  rates  in 
order  to  keep  to  his  contract.  Should  the  stock  fall  im- 
mediately after  to  69,  B  would  come  forward  and  pro- 
pose settlement.  In  that  case  A  will  have  lost  by  both 
0  and  B  $  30  on  each  share.  "Were  the  market  to  per- 
manently rise  or  fall  there  would  be  no  loss  in  the  end, 
but  in  the  ordinary  conditions  of  the  present  market  this 
form  of  speculation  is  perilous.  We  are  informed,  how- 
ever, that  years  ago  it  was '  quite  frequently  practised. 
Its  real  enemy  is 

THE   CORNER. 

This  device  is  tolerably  understood  through  the  events 
of  the  great  gold  panic  of  September,  1869.  It  requires 
large  masses  of  capital,  great  shrewdness,  a  happy  com- 


88      MEN  AND  MYSTEEIES  OF  WALL  STREET. 

bination  of  circumstances,  and  adroitness  in  turning  even 
ill  fortune  to  advantage.  Its  effect  upon  speculation  is 
very  much  like  trolling  in  the  fishing-business.  Its 
definition  is  simple,  but  its  applications  are  full  of 
variety.  When  more  of  a  stock  has  been  bought  than 
the  market  can  furnish,  the  corner  is  inevitable.  The 
conditions  of  the  problem  may  take  two  forms  :  — 

I.  Twice  or  thrice  the  whole  capital  stock  of  a  railroad 
or  other  corporation  may  be  bought  through  time  pur- 
chases.    If,  simultaneously,  sufficient  stock  be  sold  for 
delivery  after  the  period  that  the  purchases  fall  due  to 
cover  the  sum  total  of  actual  shares  in  the  market,  the 
scheme  becomes  perfect  and  the  profits  are  immense.     It 
was  in  this  way  that  the  Morris  Canal  corner  and  the 
corners   in   Harlem,  Prairie  du  Chien,   and   Michigan 
Southern,  were  engineered. 

II.  Again,  the  amount  of  stock  of  a  given  corporation 
that  is  in  the  street  may  be  accurately  ascertained.     A 
further  estimate  may  be  made  of  the  proportion  of  stock 
held  for  investment  which  is  likely  to  come  upon  the 
market  during  the  crisis.     The  speculators  then  purchase 
largely  in  excess  of  both  these  amounts,  although  not  up 
to  the  total  of  the  capital  stock.     Here,  also,  time  sales 
must  be  made  enough  to  unload  the  full  bulk  of  deliver- 
ies accruing  from  the  purchases. 

It  is  clear  that  this  style  of  corner  is  surrounded  with 
difficulties.  There  may  be  an  underestimate  of  the 
resources  of  the  street.  The  outside  holders  may  crowd 
into  the  market  beyond  the  speculative  calculation.  The 
Erie  comer  in  November,  1868,  and  the  famous  gold 


THE   METHODS   OF   SPECULATION.  89 

combination  of  September,  1869,  both  failed  from  inade- 
quate preparations  for  overcoming  these  suddenly  dis- 
closed obstacles. 

Problem  N~o.  I.  may  be  thus  illustrated :  — 

Capital  stock,  50,000.  Current  street  sales .  of  shares 
at  40. 

Through  a  dozen  or  more  brokers  150,000  shares  are 
bought  on  buyer  30.  The  Long  Room  is  the  battle- 
ground, as  there  no  registry  is  made  of  transactions. 
Coincidently  other  brokers  sell  freely  for  the  combina- 
tion at  seller  60,  30,  15,  10,  and  3,  the  latter  class  of 
sales  being  made  as  the  corner  matures.  Cash  stock  is 
made  plentiful.  Large  quantities  are  lent  on  call  at 
low  rates  to  give  the  market  an  appearance  of  natural 
ebb  and  flow.  In  three  weeks'  time  some  100,000 
shares  have  been  contracted  for  at  an  average  of  55, 
and  50,000  at  70.  Sales  of  50,000  had  been  effected 
at  the  same  time  for  an  average  of  50. 

The  purchases,  all  at  buyer's  option,  are  at  once  called 
in.  The  street  is  in  dismay.  The  clique  owns  all  the 
stock.  It  has  matured  contracts  for  nearly  three  times 
the  whole  capital  stock.  Men  who  held  the  shares 
which  they  had  agreed  to  deliver  whenever  the  buyers 
presented  themselves  had  sold  them  under  the  seduc- 
tion of  the  upward  tide  of  the  market.  They  now  find 
themselves  in  the  same  condition  as  others  who  had  sold 
what  they  did  not  possess.  As  the  shares  rose,  the  clique 
had  rapidly  absorbed  all  floating  stock,  supplementing 
the  accumulation  in  their  tin  boxes  by  putting  forth 
fresh  contracts.  Locked  up  behind  the  bars  of  Trust 


90  MEN  AND   MYSTERIES   OF  WALL   STREET. 

Companies,  and  in  innumerable  bank  and  private  safes, 
at  the  order  of  the  combination,  are  the  very  shares  which 
the  street  had  reckoned  upon  for  satisfying  their  bargains. 
Deliveries  must  be  made.  Stock  for  delivery  can  only 
be  secured  through  the  clique  agents.  A  month  before 
it  was  waveless  as  a  stagnant  pool  in  the  dead  quietude 
of  40.  Now  it  rises  and  falls  in  fierce  but  swollen  fluc- 
tuations,—  to-day  150,  yesterday  160,  to-morrow  at  200, 
—  as  the  ring  changes  its  tactics  or  indulges  its  enmi- 
ties. Some  settle  at  once  ;  others  borrow  of  the  combi- 
nation from  day  to  day,  paying  fearful  usury  and  hoping 
against  hope.  At  the  end,  however,  all  contracts  must 
be  settled,  and  the  average  compromise  is  at  165.  Sup- 
posing that  the  shrewder  portion  of  the  street  had  long 
before  settled  at  90,  and  that  the  proportion  stood 
100,000  at  90,  50,000  at  165  ;  then  the  clique's  account 

would  stand :  — 

DR. 

To  100,000  shares  bought  at  55  .  .  .  .  $  5,500,000 
"  50,000  "  "  "  70  .  .  .  3,500,000 
"  net  profit 6,250,000 

$  15,250,000 
OB, 

By  50,000  shares  sold  at    90     .        .        .  $  4,500,000 

"  50,000  "  "  «  165  .  •  .  .  .  8,250,000 
"  50,000  "  contracted  to  be  delivered  at  50  2,500,000 

$  15,250,000 

This  statement  of  profits  is,  of  course,  incomplete.  It 
does  not  include  the  money  accruing  from  loans  of  stock, 
nor  is  the  percentage  of  brokerage  deducted.  But  the 
gain  of  over  six  and  a  quarter  millions  would  neces- 


THE  METHODS   OF  SPECULATION.  91 

sarily  result  from  the  speculation.  Of  course,  such  a 
corner  could  only  be  engineered  with  vast  capital  and 
under  powerful  interests.  Some  two  millions  would  be 
required  for  margins.  A  considerable  portion  of  the 
bona  fide  stock  would  probably  be  bought  out  and  out, 
or  previously  held  by  the  speculators.  But  the  charac- 
ter of  an  operation  like  this  is  such  that  the  money 
could  mainly  be  borrowed  on  easy  terms. 

In  the  famous  Morris  Canal  corner  of  '35,  a  clique  in 
New  York  and  Newark  quietly  bought  up  all  the  stock 
at  thirty  or  forty  per  cent  below  par.  They  then  went 
into  the  street  and  made  enormous  time  purchases.  On 
settling-day  the  pool  unloaded  at  150,  clearing  nearly 
three  hundred  per  cent. 

A  still  more  audacious  corner  was  effected  the  same 
year  in  Harlem.  The  stock  consisted  of  7,000  shares. 
64,000  shares  were  bought  by  the  ring  within  a  period  of 
seven  weeks.  Settlement-day  was  in  September.  Stock 
bought  in  July  at  123,  buyer  60,  paid  a  difference  of 
seventy-two  per  cent  to  the  pool  who  held  the  market  at 
195.  On  two  days  of  the  middle  of  September  four 
thousand  shares  came  due  with  differences  mounting  up 
to  $  100,000  in  favor  of  the  pool.  The  short  interest 
was  frantic.  A  meeting  of  the  Board  was  called,  and 
the  discussion  was  fierce  and  protracted.  The  final  vote 
decreed  that  contracts  must  be  satisfied.  But  the  shorts 
were  determined,  and  the  ring  foolishly  gave  a  fresh 
twist  to  the  stock,  running  it  up  to  200.  The  Board  was 
convened  anew,  and  the  brokers  elected  a  committee  of 
four,  to  whom  differences  should  be  paid,  and  who  should 


92  MEN  AND  MYSTEKIES   OF  WALL  STREET. 

arbitrate  between  the  parties.  The  New  York  Adver- 
tiser, in  its  comments,  intimated  that  the  street  was 
ready  to  settle  at  160  or  170  for  corner  stock,  and  the 
clique  subsequently  consented  to  the  compromise. 

In  November,  1865,  the  clever  Prairie  du  Chien 
corner  was  sprung  upon  Wall  Street.  This  then  ob- 
scure Western  road  had  a  capital  stock  of  $2,900,000, 
and  the  shares,  when  the  speculation  started,  were  selling 
for  60.  The  clique  lent  out  thousands  of  shares,  and 
created  an  enormous  short  interest.  On  the  last  Mon- 
day of  the  month  Prairie  du  Chien  had  been  forced 
up  to  250.  Settlements  were  made  from  110  to  210, 
and  one  banking-house  paid  $  125,000  to  escape.  Wm. 
H.  Marston,  once  cashier  of  an  Illinois  bank,  was  the 
leading  spirit  of  this  ring. 

Two  years  before,  John  M.  Tobin  undertook  his  corner 
in  Harlem.  The  stock  was  selling  at  40.  Commodore 
Vanderbilt  was  interested  in  the  Broadway  Railroad 
grant,  and  the  Common  Council  of  New  York  had 
thrown  its  influence  against  it,  many  individual  mem- 
bers at  the  same  time  going  short  on  Harlem.  As 
Tobin  owned,  or  had  privately  purchased  the  entire 
capital  stock  of  the  road,  it  was  easy  to  run  the  price  up 
to  164.  This  was  in  September,  and  as  soon  as  settle- 
ments were  made  the  shares  dropped  to  80.  Early  the 
next  year  the  Legislature  of  the  State  repealed  the  grant, 
and  half  the  Assembly  entered  on  a  bear  raid  against 
Harlem.  The  stock  began  to  fall.  The  shorts  increased. 
Then  Tobin  sought  the  assistance  of  the  Commodore, 
and  together  they  run  the  shares  up  to  285,  at  which 


THE   METHODS   OF   SPECULATION.  93 

point  many  contracts  came  due.  Several  housed  failed, 
and  not  less  than  three  million  dollars  were  taken  from 
the  street  by  Tobin  and  his  colleague.  Individual  op- 
erators who  had  agreed  to  deliver  from  1,000  to  1,200 
shares,  were  glad  to  compromise  by  paying  some  one 
hundred  and  eighty  thousand  dollars. 

The  extreme  prices  in  corners  are  to  be  explained 
simply  from  the  fact  that  the  cliques  hold  all  the  stock, 
and  can  therefore  exact  whatever  rates  they  please. 
Nevertheless,  apart  from  the  power  of  a  monopoly,  there 
is  a  subtle  force  which  in  all  scarcity  raises  the  selling 
rates  of  an  article  out  of  all  proportion  to  the  actual 
deficiency.  Gregory  King,  in  a  series  of  studies  upon 
the  prices  of  the  food  market  in  Europe,  generalizes 
from  the  statistics  at  his  command  the  following  con- 
clusion :  — 

A  deficiency  of  1  tenth  raises  the  price  3  tenths. 
"  "          "  2  tenths    "        "       "      8      " 

"  «          «  3      "         "       "       "    16      " 

"          «         «  4      "         "       "       "   28      " 
"         "  5      "        «       "      «   45      " 

In  shares,  however,  it  is  probable  that  the  earlier 
deficit  produces  less  effect,  while  great  scarcity  tells  in 
even  more  rapidly  ascending  ratios. 

Problem  No.  II.  may  be  thus  exemplified :  — 

Capital  stock,  50,000 

10,000  held  at  London  and  Amsterdam. 

20,000  held  by  farmers,  local  tradesmen,  professional 
men,  etc.,  in  the  section  where  the  prop- 
erty lies. 

20,000  in  the  street,  selling  at  40. 


94  MEN  AND   MYSTEEIES   OF  WALL   STREET. 

The  ciique  quietly  buys  40,000  shares  at  an  average  of 
60,  seller  10,  and  buyer  30.  The  movement  is  concealed 
by  cash  sales  and  free  loans  for  a  week,  and  then  the 
deliveries  are  demanded.  In  its  efforts  to  cover  its 
shorts  (argot  for  purchasing  sufficient  stock  to  fulfil  con- 
tract), the  share  rate  is  run  up  to  120.  The  ten -day 
men  are  forced  to  settle  at  this  figure;  the  thirty-day 
men  are  equally  embarrassed.  There  has  been  no  time 
for  the  unspeculative  holders  of  shares  remote  from  the 
market  to  bring  any  large  portion  forward.  The  foreign 
holders  cannot  make  a  delivery  by  cable,  and,  before 
telegraphic  intercourse,  they  could  not  be  advised  of  the 
combination.  The  ring's  account  would  stand  as  fol- 
lows :  — 

DR. 

To  40,000  shares  bought  at  average  of  60  .  $  2,400,000 
"  2,000  shares,  bought  to  steady  market  at  120,  240,000 
"  net  profit 860,000 

$3,500,000 
CR. 

By  20,000  shares  compromised  for  at  120  .  $  2,400,000 
"  22,000  shares  worth  at  cash  sale  50  .  .  1,100,000 

$  3,500,000 

The  2,000  shares  represent  the  portion  thrown  in  by 
outside  holders  eager  to  profit  by  the  rise.  They  in- 
evitably gain,  as  the  clique  is  compelled  to  pay  the  high 
price  in  order  to  make  a  basis  for  the  settlement  of  dif- 
ferences. As  the  combination  must  take  all  the  stock 
offered  for  delivery,  it  comes  out  with  22,000  shares  in 
hand.  It  might  have  sold  this  before  the  culmination 


THE   METHODS   OF   SPECULATION.  95 

of  the  corner,  at  seller's  option,  —  the  only  safe  and 
quickly  profitable  procedure,  as  the  street  can  now 
heavily  bear  the  market,  running  the  stock  down  to 
25.  But  it  is  evident  that  the  ring  can  afford  to  throw 
the  whole  mass  of  shares  into  the  East  Eiver,  and  still 
come  out  with  two  millions  in  hand.  Fiirthermore,  the 
short  interest  developed  by  the  desire  for  revenge  may 
immediately  be  caught  in  a  second  corner  far  more  disas- 
trous than  the  first.  In  effect  this  last  strategy  was  put 
into  practice  by  Leonard  Jerome,  and  a  few  of  his 
friends,  in  the  Hudson  corner  of  '63.  This  scheme  was 
the  impulse  of  the  moment.  The  bears  had  hammered 
the  stock  down  to  112  and  below.  Jerome  was  a  large 
holder,  and,  irritated  at  the  decline  in  price,  sent  orders 
to  several  brokers  to  take  ail  that  was  offered  at  seller's 
option.  This  continued  for  several  days,  till  the  market 
began  to  fail.  Then  the  ring  began  to  buy  cash  stock 
until  nearly  the  whole  of  the  capital  stock,  except  some 
held  as  investment,  had  been  secured.  At  this  stage  ap- 
plications were  made  to  bear  houses  to  "turn"  the  stock. 
They  bought  it  cash  of  the  clique,  and  sold  it  back  at  an 
advance,  upon  ten,  twenty,  or  thirty  days'  options.  This 
apparent  weakness  so  far  persuaded  the  street  that  the 
ring  was  in  sore  need  of  money,  that  a  short  interest 
again  developed,  and  cash  stock  was  sold  for  future 
delivery  freely,  —  the  clique  quietly  absorbing  it. 

When  the  options,  given  in  the  turns,  matured,  the 
bears  found  themselves  in  "a  corner."  There  was  no 
stock  to  be  had.  Hudson  mounted  to  180.  Then  the 
lending  houses  began  to  implore  and  bewail.  They  had 


96  MEN  AND   MYSTERIES   OF  WALL   STREET. 

made  "  the  turn "  simply  as  an  accommodation,  and  it 
was  exceedingly  unfair  that  they  should  now  have  to 
lose  five  or  six  thousand  dollars  on  •  every  hundred 
shares.  The  clique,  however,  was  inexorable,  but  con- 
descended to  lend  the  stock  at  five  per  cent  a  day. 
There  were  50,000  shares  due,  and  on  a  large  propor- 
tion this  extreme  interest  was  paid  for  several  days. 
At  last,  in  despair,  the  bears  bought  the  stock.  "What 
little  remained  was  disposed  of  at  private  sale.  The 
profits  of  the  ring  can  only  be  estimated  by  millions. 

The  risk,  in  this  species  of  corner,  lies  in  a  miscalcu- 
lation of  the  amount  really  held  by  the  street,  and  in 
an  underestimate  of  the  number  of  outside  holders 
ready  to  avail  themselves  of  the  rising  prices.  Thus,  the 
actual  state  of  the  stock  just  used  for  illustration  might 
have  been  as  subjoined  •  — 

Capital  stock,  50,000 

5,000  held  in  Amsterdam. 

5,000  recently  held  in  London,  but  already  in  Cunard 

steamer,  due  at  New  York  in  two  days. 
5,000  held  in  Philadelphia. 
3,000  held  in  Boston. 

2,000  held  in  Providence,  in  hands  of  large  capital- 
ists. 

10,000  held  by  small  capitalists  at  a  distance. 
20,000  in  the  street,  selling  at  50. 

The  clique  buys  20,000  at  60,  seller  10,  and  20,000, 
buyer  30,  for  same  average.  It  then  runs  the  price  up  to 
120,  at  which  rate  it  had  secretly  determined  to  settle. 
Up  to  this  moment  it  had  absorbed  the  recent  invoice 


THE   METHODS   OF   SPECULATION.  97 

from  London,  the  Philadelphia  supply,  and  the  20,000 
block  held  in  New  York.  But  as  no  contract  had 
matured,  it  could  not  be  conscious  of  the  situation. 
The  ring  could  buy  3,000  at  120,  to  hold  the  market, 
but  there  its  resources  ended.  Boston  sells  at  once,  and 
the  stock  recoils  to  80.  Providence  sells,  and  the 
shares  slide  down  to  50.  From  all  quarters  come  tele- 
grams from  the  minor  holders  with  orders  of  "  Sell "  and 
no  limit,  seeing  that  at  120  their  hopes  have  become 
illimitable,  and  in  a  drooping  market  2,000  more  shares 
are  thrown  in,  leaving  the  stock  flat  at  30,  with  no 
buyers,  and  at  that  point  the  sellers  at  seller  10  deliver. 
The  account  would  stand :  — 

DR. 

To  40,000  shares  bought  at  average  of   60  .  .  $  2,400,000 

«     2,000      "          "           "            "   120  .            240,000 

"     1,000      "          "           «            "   110  .  .         110,000 

$2,750,000 
OR. 

By  43,000,  market  value  30      .        .        .        .      $  1,290,000 
"    net  loss 1,460,000 


$  2,750,000 

The  clique  might,  perhaps,  have  sold  their  40,000  at 
60,  sellers  30,  before  the  real  shaping  of  the  market  was 
known.  That  would  have  placed  the  credit  statement 
thus :  — 

By  40,000  .  .  .  @  60  .  .  $  2,400,000 
"  3,000  .  .  @  30  .  .  90,000 
260,000 

$  2,750,000 
o 


98  MEN  AND   MYSTERIES  OF  WALL  STREET. 

In  this  case  their  loss  would  be  moderate,  and  would 
yet  remain  a  quarter  of  a  million.  It  will  be  observed 
that  in  this  aspect  of  the  corner  the  small  outsiders  are 
proportionately  the  heavier  losers.  They  sold  at  30,  and 
will  ever  after  regard  Wall  Street  as  the  treasure-house 
of  thieves. 

One  hazard  overhanging  all  corners  has  yet  to  be 
noted.  Our  previous  suppositions  have  implied  the  in- 
tegrity of  capital  stock.  But  in  pursuance  of  modern 
ideas,  the  directors  of  great  corporations  sometimes  hold 
that  their  affairs  should  be  managed  with  an  eye  to  the 
street.  The  single  eye  is  full  of  light,  and  the  more 
light  reserved  for  the  Stock  Exchange  the  less  of  it  that 
remains  for  a  disagreeable  illumination  of  the  ways  and 
sinuosities  of  the  management.  Accordingly,  money  is 
borrowed  for  dividends  in  order  to  keep  the  stock  high 
in  the  register,  or  the  earnings  which  should  have  been 
distributed  among  shareholders  are  transferred  to  con- 
struction account  lest  dividend  day  might  affect  the 
stock  market  by  an  unhealthy  appreciation  of  shares. 
Nearly  all  our  great  railroads  have  charters  in  which  a 
high-priced  New  York  lawyer  can  detect  an  obscure  and 
inferential  permission  to  enlarge  the  capital  under  cer- 
tain conditions.  Bonds  also  are  frequently  possessed 
of  the  privilege  of  conversion  into  stock  without  very 
definite  details  regarding  time  or  manner.  Judging  by 
not  infrequent  occurrences  it  may  not  be  far  wrong  to 
suppose  that  the  sufficing  motive  for  a  fresh  emission 
-of  shares  or  conversion  of  bonds  is  to  be  found  in  the 
appearance  of  a  corner,  or  of  a  movement  partaking  in 


THE  METHODS   OF   SPECULATION.  99 

some  degree  of  the  nature  of  this  phase  of  speculation. 
Perhaps,  indeed,  a  more  accurate  definition  would  be 
that  railway  companies  are  empowered  to  add  unex- 
pectedly to  their  capital  stock  whenever  controlling  direc- 
tors are  not  members  of  a  cornering  combination,  and  are 
so  far  operators  in  the  street  as  to  be  affected  disas- 
trously by  the  success  of  such  combination. 

Railway  directors  are  the  heavy  artillery  of  the  stock 
market,  and  no  corner  can  attain  Napoleonic  victories 
without  them.  An  important  feature  in  this  speculation 
is  to  know  who  are  the  real  holders  of  stock.  This  can 
be  discovered  most  expeditiously  by  an  examination  of 
the  transfer  books ;  and,  of  these,  the  directors  hold  the 
key.  They  also  can  alone  check  the  influx  of  newly 
rustling  shares.  This  was  the  secret  of  Tobin  and 
Vanderbilt's  "  Harlem  Squeeze  "  of  1865.  They  owned 
the  property  and  knew  all  its  points. 

It  was  this  satisfactory  reliance  which  upheld  famous 
Jacob  Little  when  in  a  great  strait.  He  had  been  selling 
Erie. for  future  delivery.  He  was  no  one  knows  how 
many  hundred  thousand  dollars  short  in  the  stock. 
Every  broker  in  the  Board  combined  against  him.  On 
settlement  day,  as  the  story  goes,  he  walked  up  Wall 
Street  with  serene  countenance,  while  the  joy  of  expec- 
tant disaster  gleamed  darkly  and  scornfully  at  him  from 
a  hundred  eyes.  He  had  been  long  known  as  the  Napo- 
leon of  the  Exchange,  and  all  the  brokers  said  that  two 
o'clock  would  be  his  Waterloo.  At  one  P.  M.  he  stepped 
into  the  Erie  offices,  presented  a  block  of  convertible 
bonds,  and  demanded  instantaneous  surrender  of  equiva- 


100  MEN   AND   MYSTERIES   OF  WALL   STREET. 

lent  shares.  Then  he  rode  round  to  his  office,  and  the 
startled  Stock  Board  found  that  Blucher  and  night  had 
come  !  Daniel  Drew  in  similar  extremity  has  mounted 
the  Erie  stairway  time  and  again  on  the  same  errand, 
and  with  like  success. 

The  celebrated  corner  in  Milwaukee  and  St.  Paul  was 
undertaken  without  the  safeguard  of  a  co-operating  direc- 
tion. The  feature  of  this  speculation  was  the  employ- 
ment of  calfe  instead  of  buyer's  options.  Its  master- 
mind was  Garner.  The  stock  was  selling  at  47  in  Janu- 
ary, and  the  operator  bought  calls  at  twelve  months, 
covering  the  whole  capital  stock,  —  paying  $800,000  in 
premiums.  He  then  put  his  broker  into  the  Boards 
with  orders  to  bid  it  up,  and  by  October  it  was  quoted 
at  111.  At  this  point  the  direction  voted  an  immedi- 
ate issue  of  shares  upon  a  "  construction  "  pretext,  and 
the  market  at  once  broke  to  61. 

It  is  evident  that  the  essential  principle  of  the  corner 
is  simply  the  aggravation  of  ordinary  stock  speculation. 
A  man  who  sells  seller  30  hopes  that  his  commodity 
will  decline  in  value.  If  it  rises,  he  suffers,  and  expects 
to  suffer.  But  in  ordinary  cases  the  exact  limit  of  suf- 
fering is  known.  In  a  perfect  corner  there  is  no  limit, 
or  rather  the  limit  is  the  extreme  verge  of  price  at 
which  it  is  prudent  to  force  a  stock.  It  is  clearly  better 
to  settle  with  a  man  at  150  than  compel  settlement  at 
200,  thereby  breaking  him  and  receiving  only  fifty  cents 
on  a  dollar. 

A  peculiar  danger  to  which  corners  are  incident  is 
the  perfidy  of  a  portion  of  the  clique.  There  is  scarcely 


THE   METHODS   OF   SPECULATION.  101 

a  single  great  operator  that  has  not  been  charged  with 
this  weakness.  It  consists  in  quietly  selling  the  stock 
which  has  been  pledged  to  the  pool,  the  clique  buying  it 
at  high  rates  in  order  to  keep  up  the  price,  and  without 
suspecting  the  source  of  the  supply.  The  Eock  Island 
corner  of  '63  —  '64  partly  split  upon  this  snag.  It  had 
been  engineered  by  Morse  of  Fort  Wayne  fame  and  Dr. 
Durant,  the  hero  of  the  Union  Pacific  Eailroad.  In 
December  large  quantities  of  the  stock  was  hypothecated 
on  a  sixty  days'  loan.  Then  heavy  purchases  were  made. 
More  than  56,500  shares,  constituting  the  whole  capital 
stock,  was  held  or  purchased  at  short  options.  Indeed,  it 
is  asserted  that  20,000  shares  in  excess  of  capital  were 
bought.  The  price  started  at  107,  and  went  rapidly  up 
to  149.  At  that  point  it  was  discovered  that  the  pool 
was  being  betrayed.  The  detection  arose  from  the  sale 
of  certain  certificates  whose  numbers  were  known  as 
belonging  to  a  member  of  the  clique.  The  compromise 
with  the  shorts  was  at  once  effected  at  140  - 143.  This 
was  on  February  10.  The  next  day  a  broker  sold 
10,000  shares,  buyer  10,  immediately  upon  the  close  of 
second  session,  and  the  corner  subsided  directly  after. 

An  absolute  equivalent  to  gambling  is  not  to  be  found 
in  any  phase  of  speculation,  but  what  are  sometimes 
called  "  privileges  "  approach  very  nearly  to  the-  nature 
of  a  bet. 

Privileges  are  either  puts  or  calls. 

A  put  is  where  a  certain  sum  is  paid  for  the  privilege 
of  delivering  a  given  amount  of  stock,  within  a  stipulated 
time,  at  a  definite  price.  Suppose  an  operator,  A,  on 


102  MEN  AND   MYSTEKIES   OF   WALL   STEEET. 

March  20,  1868,  paid  John  Jones  $200  for  &  put  on  two 
hundred  shares  of  Hudson  at  135  any  time  within 
twenty  days.  The  contract  of  the  giver  of  the  put 
would  read  as  follows:  — 


P< 
H 


H 


NEW  YORK,  March  20,  1868. 

For  Value  Received,  the  Bearer  may  DELIVER  ME 
Two  Hundred  Shares  of  the  Stock  of  the  Hudson  River 
Railroad  Company,  at  One  Hundred  and  Thirty-five  per 
cent,  any  time  in  Twenty  days  from  date.  The  under- 
signed is  entitled  to  all  the  dividends  or  extra  dividends 
declared  during  the  time. 

JOHN  JONES. 


The  stock  sold  at  138  on  the  day  of  the  bargain.  It 
is  evident  that  a  fall  of  one  per  cent  on  "put"  price 
would  be  necessary  for  the  recovery  of  the  whole  pre- 
mium. After  that  every  fractional  decline  would  be  a 
gain.  Hudson  was  123  on  April  9.  A  then  presented 
the  above  slip  of  paper,  and  received  the  difference  be- 
tween the  price  contracted  for  and  the  street  rate.  His 
profit  stood  thus :  — 

Received  $  12  a  share  on  200  shares     .        .  $  2,400 
Paid  for  privilege  one  per  cent          .         .  200 

_  Net  gain $2,200 

A  call  is  simply  the  reverse  of  a  put.  A  sum  is  paid 
as  premium  for  the  privilege  of  demanding  within  a 
designated  date  a  given  amount  of  stock  for  a  certain 
stipulated  price.  In  April,  1868,  Kock  Island  sold  low. 
It  had  been  ranging  for  some  months  previously  from 


THE   METHODS   OF   SPECULATION.  103 

par  far  down  into  the  nineties.  On  April  15  a  broker 
in  the  bear  interest  sold  five  hundred  shares  at  85.  Sup- 
pose on  that  day  a  speculator,  C,  had  offered  $  100,  or 
half  of  one  per  cent,  for  the  right  of  demanding  two  hun- 
dred shares  within  twenty  days  at  89.  The  market  was 
unstrung.  Various  rumors  were  afloat  to  the  detriment 
of  the  company,  and  the  call  sought  for  was  readily  sold. 
The  blank  agreement,  when  properly  filled  in,  read  in 
this  wise :  *  — • 


NEW  YORK,  April  15,  1868. 

For  Value  Received,  the  Bearer  may  CALL  ON  ME 
for  Two  Hundred  Shares  of  the  Stock  of  the  Chicago  and 
Rock  Island  Railroad  Company,,  at  Eighty-nine  per  cent, 
any  time  in  Tw.enty  days  from  date.  I7ie  bearer  is  enti- 
tled to  all  the  dividends  or  extra  dividends  declared  during 
the  time. 

BELDEN  FISK,  JR. 


The  aspects  of  the  speculation  may  be  thus  stated: 
If,  up  to  May  4,  Bock  Island  had  remained  constantly 
below  89,  C  would  of  course  have  waived  his  right.  The 
premium  would  in  that  case  be  a  dead  loss,  but  that 
would  be  his  whole  loss.  At  89^  he  could  make  his  call 

*  This  agreement  is  not  perfectly  explicit.  In  the  Vanderbilt  Harlem 
corner,  an  old  operator  unsuspectingly  sold  a  number  of  "calls"  at 
about  130.  When  Harlem  had  reached  250,  a  demand  for  the  stock 
was  made.  He  fell  back  on  the  ambiguous  wording  of  the  paper, 
declaring  he  was  the  victim  of  a  conspiracy.  The  agreement  which  he 
had  signed  was,  as  he  claimed,  a  permission  on  parties  to  call  for  the 
stock  without  a  word  requiring  his  delivery  of  it.  As  a  criticism  the 
excuse  would  seem  valid  ;  but  usage  and  the  operator's  own  intent  when 
he  made  the  sales  were  both  against  this  absurd  subterfuge. 


104  MEN  AND   MYSTERIES  OF  WALL   STREET. 

and  recover  half  his  premium ;  at  89|  the  entire  bonus 
would  be  recovered.  In  other  words,  the  transaction,  to 
be  profitable,  presupposed  a  rise  of  more  than  half  of  one 
per  cent. 

Actually,  however,  on  May  4  the  lowest  quotation  of 
Rock  Island  was  98,  and  C  called  upon  Richard  Eoe  to 
keep  to  his  contract.  The  speculation,  when  Roe  settled, 
was  in  this  shape :  — 

Hoe  paid  C  in  differences  $  9  a  share  on  200  shares  .  $  1,800 
C  had  previously  paid  as  premium  for  call      .         .  100 

C's  net  profit $  1,700 

It  is  apparent  that  no  one  would  wish  to  deliver  stock 
at  less  than  the  market  price,  or  demand  it  on  terms 
above  ruling  rates.  The  person  who  purchases  a  put, 
therefore,  anticipates  a'  decline  below  the  percentage 
fixed  in  the  contract.  The  holder  of  a  call,  on  the  other 
hand,  buys  it  in  hope  of  a  rise. 

The  scientific  operator  varies  these  simple  forms  by 
several  classes  of  artifices. 

1.  He  buys  a  few  puts  and  covers  with  purchases  of 
as  many  calls  as  the  market  will  accept.  The  former 
transaction  deludes  the  street.  The  business  is  done 
through  different  brokers,  and  it  is  clear  that  the  steadier 
the  price  of  one  class  of  privilege,  the  cheaper  and  more 
plentiful  will  be  the  market  of  the  others.  For  ex- 
ample :  — 

On  a  certain  October  llth,  D  buys  five  30-days'  Erie 
puts  amounting  in  all  to  600  shares,  the  delivery  price 
being  40,  and  the  premium  four  per  cent.  The  next 


THE  METHODS   OF   SPECULATION.  105 

day  or  the  same  day  he  "buys  thirty  days'  calls  for 
10,000  shares  of  Erie  at  40,  paying  half  of.  one  per  cent 
premium.  He  looks  to  a  rise,  and  on  October  31  finds 
his  foresight  confirmed,  and  Erie  stiff  at  50.  Settlements 
are  demanded,  and  the  speculation  in  calls  closes  with 
the  subjoined  result:  — 

Ten  per  cent  in  differences  on  10,000  shares  of  Erie  .  $  100,000 
Deduct  premiums,  one  half  of  one  per  cent  on  10,000 

shares  of  Erie 5,000 

Balance  of  profit $  95,000 

Erie  failed  to  fall  below  40  till  after  November  10. 
The  puts  were  therefore  a  clear  loss.  Deduct  four  per 
cant,  =  $  2,400,  and  the  final  result  of  the  venture 
stands  $92,600. 

2.  Another  method  is  one  which  the  great  "specu- 
lative director  "  of  Erie  had  the  credit,  a  few  years  ago, 
of  putting  into  practice.  It  consists  in  secretly  buying 
up  the  great  bulk  of  a  particular  stock,  and  then  selling 
some  fifty  or  a  hundred  thousand  dollars'  worth  of  puts 
for  thirty,  sixty,  or  ninety  days.  The  stock  must  be  one 
of  seeming  weakness,  and  69  or  70  are  good  figures  on 
which  to  base  a  contract.  As  soon  as  the  puts  are  sold, 
the  operator  has  only  to  keep  the  market  above  70  till 
the  ninety  days  are  past,  which  is  easy,  because  the 
previous  purchases  naturally  render  the  shares  buoyant 
precisely  as  in  a  corner.  The  operator  pockets  his  pre- 
mium, and  also  sells  off  the  stock  he  had  accumulated 
at  probably  a  handsome  advance.  In  August,  1865,  if 
current  rumor  is  to  be  credited,  a  trap  to  catch  green- 

5* 


106  MEN  AND   MYSTERIES   OF  WALL   STREET. 

backs  after  this  beautiful  system  was  set  by  the  muni- 
ficent founder  of  th^  Drew  Theological  Seminary.  On 
the  last  week  of  that  month  Erie  sold  for  82,  and  puts 
were  freely  offered  at  one  per  cent  for  thirty  or  sixty 
days,  at  80  or  81.  The  street  caught  at  the  prize,  pur- 
chasing puts  in  blocks  of  500,  1,OQO,  5,000  shares,  — 
in  any  shape  and  to  any  amount  offered.  Something 
like  $300,000  were  quietly  absorbed  in  five  or  six 
days.  Then  Erie  began  to  rise :  one  day  it  was  84 , 
the  next,  87.  Shrewd  speculators,  with  their  pockets 
crammed  with  privileges,  thought  they  understood  the 
game,  and  at  once  thronged  to  the  Long  Room  and 
bought  heavily.  No  blunder  could  have  been  more 
absurd.  The  man  who  sold  the  puts  held  Erie  in 
the  palm  of  his  hand.  He  could  depress  it  to  80,  he 
could  raise  it  to  90 ;  but  the  price  rested  with  himself. 
When  they  bought,  it  fell ;  when  they  sold,  it  rose.  By 
the  time  the  privileges  had  expired,  these  vibrations 
of  the  market  had  enabled  the  king  operator  to  add 
to  his  gains  in  premiums  two  fresh  profits  from  bull 
and  bear.  It  is  a  curious  incident  of  this  bit  of  strategy, 
that  the  stock  had  really  been  accumulated  for  the  pur- 
pose of  controlling  the  annual  October  election  of  direc- 
tors, the  rich  harvest  from  the  street  being  a  mere 
episode  in  a  great  campaign. 

3.  There  is  a  yet  further  and,  under  certain  con- 
ditions, an  absolutely  secure  method.  This  consists  in 
buying  a  call,  and  immediately  selling  one  half  the  pur- 
chase at  buyer's  option ;  videlicet,  — 

B  on  November  20,  1868,  buys  a  call  for  200  shares 


THE  METHODS  OF  SPECULATION.  107 

of  New  York  Central  at  30  days ;  delivery  rate,  126  ; 
price  of  call,  $  200.  The  same  day  he  sells  100  shares, 
seller  30,  at  125.  Supposing  stock  falls  to  115  and 
keeps  there,  the  account  would  then  be:  — 

100  shares  New  York  Central,  delivered  at  125     $  12,500 
Deduct    "        "  "  "       at  ruling  rate  115      11,500 


Difference  in  B's  favor 1,000 

Loss  of  premiums  on  calls         ....  200 

Net  profit $800 

Suppose,  however,  the  stock  had  risen  to  136,  the  re- 
sult would  then  read :  — 

10  per  cent  profit  by  call  on  200  shares  New  York  Central  $2,000 

11  "         lost  on  100  shares  sold  at  125  .  .     1,100 


Take  out  premium  of  call 200 

B's  net  gain $  700 

B  would  have  been  saved  from  loss  in  the  first  case, 
even  if  Central  had  fallen  but  two  per  cent,  viz.  123 ; 
and  in  the  second  case  if  it  had  risen  to  only  127.  Had 
the  speculation  really  taken  place  at  the  time  stated, 
and  under  the  designated  conditions,  the  record  of  the 
share  list  shows  that  B  could  have  bought  in  at  115, 
seller  20,  the  100  shares  sold  at  125,  seller  30,  thus 
realizing  $  1,000.  At  the  same  time  he  would  have 
been  able  to  make  "his  call  when  the  stock  was  at  159, 
clearing  thereby  $  6,600,  or  making  in  the  whole,  with 
premium  deducted,  the  neat  sum  of  $  7,400  on  a  risk  of 
$  200.  For  it  was  in  December,  1868,  that  the  cele- 
brated scrip  dividend  of  Commodore  Vanderbilt  was 


108  MEN  AND   MYSTERIES   OF  WALL   STREET. 

declared,  and  the  street  startled  by  one  of  the  most 
audacious  strategetic  movements  of  the  year. 

Brokers,  who  are  fond  of  metaphysics,  prefer  to  con- 
sider "  privileges  "  as  in  the  nature  of  an  insurance.  The 
ckim  has  plausibility,  and  undoubtedly  the  underlying 
principle  of  not  a  few  of  these  transactions  is  one  of 
protection  against  changes  in  the  market.  An  operator 
may  be  long  in  a  certain  stock.  The  price  begins  to 
falter.  The  indications  of  a  fall  accumulate.  If  at  this 
point  he  can  buy  a  put  for  an  amount  covering  his 
venture,  he  is  safe  against  all  hazards.  A  short  interest, 
of  course,  would  be  protected  by  a  call.  A  year  or  two 
since,  within  the  writer's  knowledge,  a  gentleman  bought 
1,000  shares  of  a  certain  stock  at  65,  and  sold  it  at  69, 
clearing  $  4,000.  He  bought  again  at  67|  and  sold  at 
71 J,  making  $4,000  more.  He  then  bought  1,000  at  60. 
The  stock  dropped  to  59.  He  grew  timid.  The  street 
was  full  of  rumors,  and  he  determined  to  hedge.  He 
found  a  broker  who  agreed  to  sell  a  put  for  1,000  shares 
at  55  on  payment  of  $  10,000.  The  money  was  given; 
when  the  market  suddenly  veered  round  and  the  stock 
went  flying  up  to  71.  There  he  sold,  gaining  $  11,000, 
or,  deducting  the  exorbitant  premium  of  the  put,  $  1,000. 
He  had  previously  cleared  $  8,000,  and  was  wise  enough 
to"  stop.  In  the  Erie  speculation  alluded  to  in  a  previous 
page  the  puts  were  largely  bought  as  a  safeguard  against 
a  possible  break  in  the  market,  and  to  that  extent  the 
purchases  were  wise. 


CONCERNING   STOCK-BROKERS.  109 


CHAPTEE  VII. 

CONCERNING   STOCK-BROKERS. 

~|i  VEMBEESHIP  of  the  New  York  Stock  Exchange 
_iVi  is  the  equivalent  of  a  liberal  education.  It  costs 
quite  as  much  in  hard  cash  and  brain  wear,  and  is 
worth  neither  more  nor  less  when  acquired.  There  are 
brokers,  as  there  are  lawyers  and  doctors,  who  lay  up  no 
treasures  on  earth,  yet  manage  to  slide  up  and  down  be- 
tween debits  and  credits  with  average  comfort  and  some 
felicity.  There  are  brokers  whose  candle  of  fortune  has 
been  snuffed  out  in  a  day,  and  who  wander  about  the 
scene  of  their  financial  demise  with  the  tenacity  of  spec- 
tres. There  are  others  still,  whose  hands  have  the  Midas 
touch,  —  men  of  large  ideas  and  generous  luck,  keen,  ver- 
satile, coining  advantage  out  of  misfortune,  —  the  stamp 
of  humanity  which,  in  the  sarcastic  mot  of  Napoleon, 
wins  a  fortune  as  one  gains  a  battle. 

In  the  good  old  times  (nobody  knows  the  date,  and  it 
was  probably  in  dream-land),  brokers  throve  mightily, 
and  grew  passing  rich  simply  upon  their  commissions. 
There  is  a  tradition  of  this  in  the  manual  of  the  Stock 
Board,  and  no  one,  from  reading  that  terse  but  over-dry 
code,  would  suspect  that  brokers  ever  did  aught  beyond 
buying  or  selling  for  other  men  in  consideration  of  due 
percentage.  In  fact,  were  these  commissions  always 


110  MEN  AND   MYSTERIES   OF  WALL   STREET. 

equal  to  the  lawful  maximum,  and  the  volume  of  actual 
business  really  dependent  upon  outside  orders,  there 
would  be,  as  we  have  seen,  the  neat  average  income  of 
about  $109,000.  Before  the  war,  when  the  bulk  of 
securities  was  not  half  that  of  the  present,  legitimate 
brokerage  was  a  profitable  profession,  and  the  pressure 
of  rivals  did  not  seriously  affect  the  old  houses.  But 
with  the  great  national  debt,  the  fluctuations  in  gold, 
and  the  rise  in  shares,  a  crowd  of  new  men  came  pour- 
ing into  the  street.  The  Stock  Exchange  shut  its  doors 
against  this  influx.  New  members  were  elected  with 
exceeding  reluctance,  and  under  constant  peril  of  black- 
ball. Unquestionably  one  motive  for  this  exclusiveness 
was  the  honorable  desire  to  preserve  the  integrity  of 
their  business.  Dealing  in  values  whereof  much  is  un- 
substantial, and  in  a  class  of  trade  where,  in  the  opinion 
of  a  prejudiced  public,  a  narrow  margin  of  fact  skirts  a 
boundless  space  of  fiction,  they  were  justly  urgent  that 
the  margin  itself  —  the  terra  firma  of  capital  and  credit 
—  should  be  as  solid  as  practicable.  High  above  the  in- 
stinct of  safety,  however,  was  the  instinct  of  profit. 

Of  course,  the  attempt  to  monopolize  proved  nugatory. 
The  Stock  Exchange  maintained  its  respectability,  but 
it  could  not  prevent  men  hungry  for  wealth,  determined, 
full  of  eagerness  and  dlan,  from  crowding  the  pavement, 
extemporizing  a  market,  and  finally  establishing  organi- 
zations of  their  own.  Hence  rose  the  Open  Board  and 
the  Gold  Koom. 

The  members  of  these  competing  associations  called 
themselves  operators,  and  preferred  the  ten  and  twenty 


CONCEENING   STOCK-BECKERS.  Ill 

per  cents  of  speculation  to  the  driblet  earnings  of  com- 
missions. They  all  had  customers.  They  took  orders 
even  more  freely  than  their  neighbors  of  the  old  school. 
They  would  work  on  lower  margins  and  smaller  per- 
centages ;  but  it  was  because  their  speculations  covered 
wider  ground,  and  their  customers'  capital  helped  to 
strengthen  their  own  position.  Naturally,  in  the  demor- 
alization of  all  values  by  the  greenback  era,  —  fortunes 
rolling  up  between  sunrise  and  sunset,  a  furnace  heat  of 
speculation  glowing  all  around  them,  —  even  the  most 
conservative  brokers  of  the  "close"  Board  yielded  to 
the  fascinations  of  the  period,  and  ventured  into  exten- 
sive operations.  Probably  there  cannot  be  found  a 
single  house  in  Wall  Street,  no  matter  how  wealthy  or 
bound  up  in  traditions,  which  could  show  books  clean 
of  stock  speculations  made  in  the  firm  interest.  In  many 
cases  these  operations  may  be  hid  under  a  thin  veil  of 
personal  accounts, — Smith  being  in  stocks;  Jones  being 
iii  gold ;  but  Smith  &  Jones  claiming  to  do  nothing 
except  a  commission  business.  Even  this  pretence,  how- 
ever, is  seldom  kept  up  when  broker  talks  with  broker. 
"When  the  Open  and  the  "  close  "  Boards  so  far  coalesced 
as  to  meet  in  one  Long  Eoom,  old  notions  had  become 
so  thoroughly  rubbed  away  that  members  spoke  frankly 
of  their  "  neat  turns "  and  "  flyers " ;  and  the  great 
majority  were  quite  ready  to  allow  that,  although  they 
never  speculated,  they  really  could  not  name  another 
house  of  which  so  much  could  be  affirmed.  To-day  the 
street  has  made  such  progress  in  conforming  language  to 
facts  that  the  habitues  of  the  Stock  Exchange  are  clas- 


112  MEN  AND   MYSTEEIES   OF  WALL   STREET. 

sified  into  bankers,  brokers,  and  operators.  By  going  one 
step  further,  and  defining  operators  as  men  who  specu- 
late generally  for  themselves,  sometimes  for  others; 
brokers,  as  persons  who  buy  or  sell  for  outsiders  and 
themselves ;  and  bankers,  as  a  combination  of  the  oper- 
ator, the  broker,  and  the  money-lender,  the  conclusion 
of  the  whole  matter  would  be  reached.  For  of  such, 
and  only  of  such,  is  the  present  kingdom  of  the  stock 
market. 

But  while  it  is  highly  essential  that  the  speculative 
aptitudes  of  Wall  Street  should  be  kept  steadily  in 
view,  it  is  not  less  important  to  guard  against  exagger- 
ated conceptions.  Taking  the  houses  connected  with 
the  Exchange  as  a  class,  there  is  probably  a  greater 
average  conservatism  in  their  transactions  than  in  those 
of  many  leading  departments  of  trade.  The  high  rates 
of  commercial  paper,  compared  with  the  low  percentages 
of  even  time  loans,  which  the  city  banks  freely  make  to 
the  really  first-class  bankers  and  brokers,  is  strong  tes- 
timony in  favor  of  this  position.  And  this  will  further 
appear  in  the  fact  that  a  very  considerable  portion  of 
the  securities  dealt  in  by  the  great  establishments  are 
governments  and  the  class  of  State  bonds  which  in 
ante-lelhim  times  furnished  the  groundwork  of  our 
entire  banking  system.  There  are  dozens  of  houses  in 
the  financial  quarter  whose  footing  is  as  stable,  and 
whose  method  of  business  is  as  guarded  as  that  of  the 
private  banks  of  London  and  the  English  provincial 
cities.  They  take  money  on  deposit,  negotiate  loans  for 
the  chief  railroads,  simply  as  agents  purchase  and  sell 


CONCERNING   STOCK-BROKERS.  113 

for  customers,  and  in  case  of  speculation  operate  in  de- 
scriptions of  securities  which  even  in  adverse  fluctuations 
will  not  endanger  their  solvency.  Their  connection  with 
the  Stock  Board  is  mainly  indirect,  and  their  profits  are 
quite  as  much  by  lending  money  as  by  stock  transactions. 
They  are  represented  at  the  Exchange  by  the  second 
partner,  by  that  indefinite  human  quantity  known  as 
"  the  Co.,"  by  an  attacM  of  the  office,  or  through  any  one 
of  a  score  of  brokers  who  take  orders  at  second  hand. 

Enter  their  offices,  and  you  discover  all  the  appoint- 
ments of  a  great  bank;  every  department  having  its 
appropriate  desk  and  officer,  a  score  of  clerks  working 
behind  the  elaborately  carved  railings,  whole  suites  of 
carpeted  apartments,  with  rooms  within  rooms,  -*-  a  vast, 
silent,  but  ever  active  financial  machine,  which  can  cash 
a  check  for  ten  dollars  or  certify  another  for  a  hundred 
thousand,  sell  fifty  government  bonds  or  buy  fifty  thou- 
sand over  the  counter,  negotiate  a  railroad  loan  of  ten 
millions,  and  exchange  fractional  currency  for  one  gold 
dollar.  Such  a  house  is  that  of  Jay  Cooke  &  Co.,  whose 
connection  with  the  government  during  the  war  is  his- 
toric. Its  annual  dealings  are  estimated  only  in  hun- 
dred millions.  It  receives  orders  from  every  State,  buys, 
sells,  loans,  to  amounts  that  would  startle  the  public,  if 
accurate  figures  were  procurable.  Henry  Clews  &  Co. 
are  of  the  same  class.  They  are  agents  of  a  dozen  rail- 
roads, and  receive  orders  daily  from  all  points  of  the 
compass.  Fisk  &  Hatch,  another  firm,  are  notable  as 
negotiators  of  the  famous  Central  Pacific  Eailroad  bonds 
and  other  securities.  These  three  houses,  with  the 


114  MEN  AND  MYSTERIES   OF  WALL  STREET. 

addition  of  Vermilye  &  Co.,  absorb  within  themselves 
nearly  the  whole  of  Wall  Street  dealings  in  govern- 
ments. Among  the  other  first-class  bankers  are  Bab- 
cock  Brothers  &  Co.,  Baltzer  &  Taaks,  Eichard  Bell  &  Co., 
August  Belmont  &  Co.  (agent  of  the  Eothschilds),  Brown 
Brothers  &  Co.  (connected  with  Brown,  Shepley,  &  Co. 
of  Liverpool,  London,  and  Eio  Janeiro),  John  J.  Cisco 
&  Son,  Dabney,  Morgan,  &  Co.  (J.  S.  Morgan  &  Co., 
London),  Drexel,  Winthrop,  &  Co.  (with  houses  in  Paris 
and  Philadelphia),  Duncan,  Sherman,  &  Co.,  Eugene 
Kelley  &  Co.  (branch  house  in  San  Francisco),  James 
G.  King's  Sons,  Howes  &  Macy,  Maitland,  Phelps,  & 
Co.,  W.  C.  Pickersgill  &  Co.  (agents  Glyn,  Mills,  Currey, 
&  Co.,  "London  and  New  Orleans),  James  Eobb,  King, 
&  Co.,  Winslow  Lanier  &  Co.,  S.  G.  &  G.  C.  Ward 
(agents  Barings),  Frederick  Schuchardt  &  Sons. 

The  influence  of  houses  of  this  character  upon  the 
Stock  Exchange,  and  especially  its  Government  and 
Bond  department,  cannot  be  overestimated.  They  con- 
stitute the  great  centripetal  force  of  the  street.  Many 
of  them  owe  the  bulk  of  their  vast  wealth  to  the  war. 
Growing  up  with  the  National  debt,  and  extending  their 
sphere  of  action  in  exact  proportion  with  the  increase  of 
our  legitimate  speculative  arena,  they  afford  the  best 
possible  guaranty  of  the  future.  Every  step  toward 
the  development  of  New  York  as  a  world-mart  must  be 
an  advancement  of  themselves,  and  self-interest  alone  is 
sufficient  to  make  them  guardians  of  the  integrity  of  the 
Stock  Board. 

Besides    these    great    establishments,   whose    really 


CONCERNING  STOCX-BROKERS.          115 

special  feature  is  that  they  are  agents  and  dealers  in 
the  heavier  and  more  substantial  classes  of  securities, 
and  sell  or  buy  in  great  quantities  "  over  counters,"  i.  e. 
directly  in  their  offices,  there  are  several  firms  of  com- 
manding influence  who  deal  mainly  through  the  Boards, 
but  have  extensive  offices  and  a  half-dozen  active  and 
silent  partners.  Among  these  are  John  Bloodgood  &  Co., 
J.  L.  Brownell  &  Co.,  Canxman  &  Co.,  Clark,  Dodge,  &  Co., 
Thomas  Denny  &  Co.  (agents  for  many  New  England 
and  New  York  banks),  Fearing  &  Campbell,  Fitch  & 
Bowen,  David  Groesbeck  &  Co.,  Hallgarten  &  Co.,  Du- 
rant  &  Earle,  Kidd,  Pierce,  &  Co.,  Kissam  &  Co.,  Law- 
rence Brothers  &  Co.,  Lees  &  Waller,  Lockwood  &  Co., 
Marvin  Brothers  &  Co.,  H.  T.  Morgan  &  Co.,  William  and 
John  O'Brien,  George  Opdyke  &  Co.,  William  M.  Parks 
&  Co.,  Eiggs  &  Co.,  Eobinson,  Cox,  &  Co.  (brokers  for 
Daniel  Drew),  Stone,  Nichols,  &  Co.,  Smith,  Gould, 
Martin,  &  Co.  (agents  for  Jay  Gould  and  James  Fisk, 
Jr.),  Ward  &  Co.,  Trevor  &  Colgate  (brokers  for  Dr. 
Shelton),  Wood,  CampbeU,  &  Co.,  Whitehouse  &  Co., 
Smith,  Eandolph,  &  Co.,  George  B.  Grinnell,  Frank 
Work  &  Co.  (the  two  last-named  houses  are  special 
brokers  for  Vanderbilt),  M.  Morgan's  Sons.  Many  of 
these  houses  are  connected  with  the  Gold  Board  as  well 
as  the  Stock  Exchange.  Several  will  carry  a  line  of 
stocks  from  five  millions  upwards.  The  commissions 
of  leading  houses  on  outside  orders  alone  are  oftentimes 
enormous. 

The  location  of  these  firms  is  in  Broad  Street,  Ex- 
change Place,  New  Streets.     Some  also  are  still  to  be 


116  MEN  AND   MYSTEKIES   OF -WALL   STREET. 

found  in  William  and  Wall  Streets.  But  the  application 
of  Wall  Street  as  a  name  for  the  seat  of  speculation  is 
now  to  a  large  extent  a  reminiscence.  Some  of  these 
offices  are  on  ground  floors ;  others,  one  flight  up 
stairs.  Many  of  them  rival  the  government  brokers  in 
the  magnificence  of  their  furniture.  Not  a  few  have 
counters,  but,  in  addition,  there  are  always  to  be  found 
high  screens  not  unlike  Exchange  shops,  with  private 
doors  opening  on  inner  rooms,  and  one  or  more  windows 
looking  out  upon  the  narrow  vestibule  where  one  enters, 
at  which  clerks  sit  on  guard.  A  small  aperture,  large 
enough  for  the  thrust  of  both  hands,  is  cut  through  the 
lower  portion  of  each  window,  and  a  stranger  peering 
up  from  under  this  outlook  can  hold  parley  with  those 
inside.  If  all  is  satisfactory,  he  is  admitted  at  the  side- 
door  ;  otherwise  he  departs  less  evenly  tempered  than  he 
came.  At  these  little  trap-holes  brokers'  clerks  are  per- 
petually presenting  themselves,  with  budgets  of  stocks 
or  checks.  If  the  latter,  the  outsider  holds  it  firmly 
with  one  hand,  while  with  the  other  he  seizes  the 
parcel  of  shares  extended  to  him  from  within.  The  clerk 
at  the  desk  has  his  grasp  likewise  upon  both  check  and 
stock.  Then  each  simultaneously  relinquishes  the  hold 
of  one  hand.  The  shares  go  out,  and  the  representative 
of  bank  deposit  goes  in.  And  so  the  final  part  of  one 
transaction  is  completed. 

The  full  number  of  these  broker  offices  is  between 
four  and  five  hundred.  Some  of  the  smaller  firms  have 
lodgement  several  flights  up,  and  the  region  between 
Williams  and  New  Streets  is  literally  honeycombed  with 


CONCERNING   STOCK-BKOKERS.  117 

them.  They  differ  in  amount  of  capital,  credit,  ca- 
pacity; but  otherwise  are  very  nearly  of  a  kin.  The 
theory  of  the  street  is  that  there  should  be  at  least  two 
partners,  one  for  the  office  and  one  for  the  Board. 
Where  one  man  carries  on  a  business  he  is  invariably 
known  as  an  operator,  buying  and  selling  almost  entirely 
for  himself.  Many  of  the  operators,  as  well  as  the 
smaller  brokers  who  act  principally  for  other  houses,  and 
are  styled  1-32  and  1-64  men,  have  simply  desk-room. 
They  number  in  all  some  two  or  three  hundred,  and 
include  a  not  inconsiderable  proportion  of  capitalists. 

The  effect-  of  speculative  concentration  is  more  and 
more  apparent  in  the  money  quarter.  The  great  broker 
and  banker  firms  gain  every  year  in  power.  The  lesser 
houses  are  becoming  dependent.  The  number  of  indi- 
vidual small  operators  and  brokers  is  diminishing.  The 
Bankers  and  Brokers'  telegraph  has  largely  assisted  this 
revolution.  Dating  its  practical  acceptance  by  the  finan- 
cial community  only  two  years  back,  this  strange  auto- 
matic messenger  now  finds  its  way  into  more  than  four 
hundred  offices,  printing  and  rolling  off,  with  wonderful 
accuracy  and  in  the  full  legibility  of  type,  the  exact 
history  of  the  stock  and  gold  market,  second  by  second, 
and  almost  instantaneous  with  the  actual  bidding.  Cus- 
tomers may  enter  behind  the  black-walnut  or  other 
screens  which  shut  out  the  profane  public  from  the 
mysteries  and  secrets  of  brokerage,  and  read  the  execu- 
tion of  their  orders  within  a  half-hour  of  their  delivery, 
and  the  brokers  themselves  are  enabled  by  this  unique 
contrivance  to  manipulate  the  market  with  an  ease  and 


118  MEN  AND  MYSTERIES   OF  WALL   STREET. 

certainty  before  impossible.  Not  only  does  this  expe- 
dient place  the  less  wealthy  broker  at  a  disadvantage, 
it  also  renders  the  duty  of  buying  and  selling  at  the 
Board  more  mechanical.  The  work  can  be  delegated 
to  clerks  by  power  of  attorney,  or  to  operators  who  will 
divide  up  commissions  with  the  large  houses.  Habitu- 
ally in  firms  composed  of  two  members,  the  abler  and 
older  partner  remains  in  the  office,  while  the  younger 
representative  of  the  house  is  constantly  at  the  Ex- 
change, executing  the  orders  with  which  the  day  starts, 
and  receiving  fresh  messages  from  head-quarters  as  new 
commissions  flow  in,  or  the  opportunity  of  a  happy 
turn  presents  itself.  Establishments  like  Jay  Cooke 
&  Co.,  Henry  Clews  &  Co.,  Vermilye,  Lockwood,  and 
Trevor  &  Colgate,  sometimes  employ  a  dozen  operators 
acting  at  the  instance  of  the  managing  head  of  the 
house. 

The  problems  before  a  thoroughly  wide-awake  broker, 
who  has  his  future  to  make,  are  something  beyond  a  par- 
allel with  any  other  profession.  He  cannot  scheme  out 
a  single  movement  without  first  taking  in  at  a  glance 
the  entire  field.  There  are  the  banks  and  brokers, — 
the  question  of  an  easy  or  stringent  market  compelling 
to  a  wide  knowledge  of  trade  influences,  exports  and  im- 
ports, cotton,  wheat,  whether  the  Secretary  of  the  Treas- 
ury will  buy  bonds  or  sell  gold,  —  a  mass  of  facts  which 
must  be  comprehended  as  fully  whether  the  speculation 
involves  five  hundred  shares  or  a  block  of  ten  thousand. 

Then  the  great  operators  must  be  watched.  Is  there 
a  clique  movement  developing  ?  Every  broker  must  be 


CONCERNING   STOCK-BROKERS.  119 

taken  up  in  detail.  Are  or  are  not  Eobinson,  Cox,  &  Co. 
selling  for  Drew  ?  Is  Lockwood  buying  for  Vanderbilt 
or  on  private  account  ?  Such  scrutiny  is  no  holiday  task. 
The  kings  of  the  stock  market  are  not  prone  to  let  the 
street  understand  their  tactics.  If  a  large  operation  is 
to  be  made,  Ursa  Major  gives  the  word  to  some  special 
agent,  who  distributes  the  order  to  A,  B,  and  C  ;  A  whis- 
pers to  D,  C  instructs  F,  B  commissions  G,  and  so  the 
complication  extends.  This  finesse  is  one  of  the  difficul- 
ties of  the  game  which  perpetually  confront  the  player. 
Brokers,  however,  have  eyes  like  ferrets  and  the  in- 
stincts of  a  Fouche.  They  detect  the  instruments  of  a 
clique  leader  almost  from  their  first  bids.  Sometimes 
they  go  wrong,  but  averagely  their  suspicions  are  infal- 
lible. It  will  be  apparent,  therefore,  that  the  duties 
incident  to  attendance  at  the  Exchange  are  anything 
but  light.  Indeed,  there  is  no  limit  to  the  shrewdness, 
coolness,  mental  alacrity,  and  aptitudes  of  all  sorts  which 
are  developed  and  strengthened  by  the  ever-fresh  condi- 
tions of  their  profession !  They  go  to  the  Boards  as 
athletes  enter  the  ring.  They  scan  the  offers  and  bids, 
and  detect  each  incipient  indication  of  unusual  move- 
ments, of  a  "  weakness "  in  this  stock  and  a  forced 
market  in  that.  The  whole  luck  of  a  customer's  order 
or  personal  ventures  may  depend  in  shouting  a  half- 
second  earlier  or  longer,  or  an  octave  higher,  than  one's 
neighbor.  Half  the  small  fortunes  of  speculation  are 
made  in  the  snap  of  the  fingers,  in  lightning-like  zig- 
zags of  buying  here  and  selling  there,  both  in  the  same 
breath,  and  over  the  heads  of  a  hundred  rivals.  A 


120  MEN  AND   MYSTERIES   OF  WALL   STREET. 

stranger  may  visit  the  Exchange  every  day  for  a  month, 
and  learn  something  fresh  each  hour.  There  is  no  end 
to  the  humor,  the  quick  expedients,  the  volatility  of 
these  men.  A  well-perfected  combination  in  some  par- 
ticular stock  has  been  upset  for  the  day  by  the  ready- 
wittedness  of  one  or  two  brokers  eager  to  foil  the  game. 
The  manual  of  the  Stock  Exchange  is  plentifully  be- 
sprinkled with  by-laws  enforcing  special  fines  for  special 
offences.  They  indicate  an  absurdly  frolicsome  spirit 
in  members.  But  half  the  foolery  has  a  meaning.  The 
plan  may  be  to  run  up  Michigan  Southern.  The  Vice- 
President  calls  off  the  stock,  and  a  burly  broker  starts  it 
off  at  an  advance  of  a  quarter.  A  neighbor  tickles  his 
ear,  and  in  a  flash  down  goes  the  offender's  hat  over  his 
eyes.  All  around  the  table  the  brokers  are  in  a  sudden 
ferment.  The  hammer  rattles  at  the  desk.  "  Fine  Peters, 
— fine,  fine,  fine  Peters.  Fine  Henderson,  Henderson, 
Henderson  "  ;  the  mob  cheers  and  shouts,  and  rolls  hither 
and  thither.  When  quiet  returns,  Michigan  Southern 
has  disappeared  and  the  call  of  a  dozen  stocks  has  in- 
tervened. The  broker  who  caused  the  tumult  has  gained 
his  point,  and  is  quite  willing  to  pay  his  fifty  or  sixty 
dollars  of  fines. 

Still  further,  the  operator  must  not  only  anticipate 
the  loan  market  and  clique  schemes,  he  must  equally 
carry  in  his  head  the  transactions  of  every  member  of 
the  Board.  He  must  know  what  stocks  Vermilye  &  Co., 
Henry  Clews  &  Co.,  Smith,  Gould  &  Martin,  D.  Groes- 
beck  &  Co.,  etc.,  are  carrying,  what  houses  are  dealing 
heavily  in  options,  who  are  holding  off,  who  are  entering 


CONCERNING   STOCK-BROKERS.  121 

the  field  in  force, —  in  a  word,  he  must  know  all  the  cards 
and  every  man's  style  of  play,  before  he  can  confidently 
set  forth  privateering.  There  are  brokers,  according  to 
rumor,  who  from  time  to  time  fee  half  the  clerks  of  Wall 
Street,  in  order  to  hold  every  "  point "  which  a  knowl- 
edge of  office  books  would  afford,  —  who  favor  club  men 
with  choice  opportunities  for  speculation,  and  then  use 
them  for  extracting  information  such  as  can  be  gleaned 
in  the  open  talk  of  the  up-town  club  palaces. 

Even  with  all  these  precautions,  the  risks  are  enor- 
mous ;  for  just  as  Eobinson  is  going  to  sail  down  upon 
Fort  Wayne,  with  cannon  all  mounted  and  with  confi- 
dence that  so  over- weighted  is  the  street  with  this  stock, 
and  so  active  is  the  money  market  likely  to  be,  that  a 
sharp  sale  of  five  hundred  or  two  or  three  thousand 
shares  will  knock  down  everything,  it  may  happen  that 
Messrs.  Eoe  &  Doe  have  just  received  a  Western  order  to 
buy  eight  thousand,  and  instead  of  a  falling  market,  the 
stock  rises  perhaps  two  per  cent.  Kobinson's  "  short " 
sale  proves,  therefore,  ruinous. 

Naturally,  the  operator  likes  to  be  on  the  side  of  the 
heavy  artillery.  To  be  "in  with"  a  great  speculative 
leader,  to  buy  and  sell  with  him,  to  take  his  points  and 
hold  the  same  line  of  stock,  are  prudential  measures 
which  Wall  Street  thoroughly  understands.  It  is  not 
always  safe,  as  the  Drew  Gambit  shows ;  but  it  is  another 
element  of  power  which  is  worth  all  the  more  if  not  too 
confidingly  relied  upon.  Old  members  of  the  Board 
have  an  inveterate  dislike  for  cliques.  What  the  sports- 
man feels  in  regard  to  a  Jersey  decoy-hunter,  or  your 


122  MEN   AND   MYSTERIES   OF  WALL   STREET. 

genuine  Down- East  fisherman  thinks  of  the  trolling 
butchery,  the  thoroughbred  stock-broker  of  the  bygone 
school  holds  respecting  these  immense  combinations 
which  take  more  money  out  of  stocks  in  a  day  than  in- 
dividual operators  would  absorb  in  a  year.  The  gold 
corner  of  September,  by  the  reaction  which  it  caused  in 
every  class  of  speculation,  had  a  disastrous  effect  upon 
the  great  mass  of  brokers'  business,  which  was  felt  for 
three  months  after.  The  outsiders  were  frightened  off. 
They  no  longer  consented  to  feed  the  street  with  fresh 
funds  when  every  calculation,  however  accurate  on  gen- 
eral grounds,  was  liable  to  be  upset  by  a  sudden  inroad 
of  from  five  to  twenty  millions  of  dollars,  sweeping  down 
or  up  the  stock  gamut  with  no  regard  whatsoever  to  the 
natural  laws  of  the  market.  Of  course  in  time  this 
timidity  disappears.  The  birds  return  to  the  plucking, 
and  all  is  once  more  merry.  But  to  brokers  the  sense 
of  insecurity  is  constant;  and  houses  which  have  no 
connection  with  the  great  rings  look  in  vain  for  the 
same  success  in  their  business  which  was  possible  when 
such  influences  were  exceptional. 

The  customer  is  an  important  integer  in  brokerage. 
The  most  speculative  house  in  the  street  has  an  ambi- 
tion for  a  good  line  of  outside  commissions.  In  fact, 
average  experience  proves  that  this  is  the  sheet-anchor 
of  brokers.  Few  houses  or  individuals  get  rich  and  keep 
rich  by  speculation  alone.  We  shall  revert  to  this  phase 
of  the  business  in  another  chapter.  But  there  are  one 
or  two  points  which  more  properly  belong  to  the  present 
page.  Brokers  are  very  careful  of  new  men.  No  re- 


CONCERNING  STOCK-BROKERS.  123 

spectable  firm  will  take  a  commission  from  any  one  who 
has  not  been  properly  introduced.  They  want  to  know 
all  about  his  means,  whether  he  be  slippery  in  his  deal- 
ings ;  in  fact,  everything  bearing  upon  his  business  pe- 
culiarities. This  scrutiny  is  an  absolute  prerequisite. 
Scarcely  any  broker  who  disregards  this  safeguard  but 
fails  to  pay  dearly  for  his  folly.  And  the  reason  of  the 
caution  will  be  readily  apparent.  Customers  invariably 
buy  or  sell  on  margins.  If  the  former,  they  are  quite 
apt  to  desire  to  have  their  stock  "  carried."  Hence  it  is 
necessary  to  be  assured  that  when  further  margin  is  re- 
quired the  money  will  be  forthcoming,  and  in  case  the 
loan  market  is  exceedingly  tight  the  additional  interest 
will  be  paid  without  murmur.  Above  seven  per  cent  is 
usury  under  the  law,  and  there  are  not  a  few  individu- 
als of  the  "  shyster  "  class  who  are  ready  to  break  their 
word,  when  they  can  shield  themselves  from  prosecution 
under  the  pretence  of  illegal  rates.  Eecent  decisions  of 
the  courts  have  made  it  obligatory  to  serve  a  notice  per- 
sonally upon  customers  when  a  fresh  instalment  of  mar- 
gin is  called  for.  This  rendering  of  the  law  has  an 
element  of  justice,  and  is  a  healthy  check  upon  sharp 
practice  on  the  part  of  brokers  ;  but  it  furnishes  a  loop- 
hole for  a  great  deal  of  outside  trickery.  Men  give 
orders,  leave  deposits,  and  then  retire.  If  the  stock  falls, 
they  have  hasty  business  out  of  town.  The  broker's 
messengers  look  for  them  in  vain.  Every  moment,  how- 
ever, the  shares  are  declining  in  value.  The  law  forbids 
their  sale,  although  the  descent  of  prices  may  cause  a 
loss  to  dealers  of  five  or  ten  thousand  dollars.  Some 


124  MEN   AND   MYSTERIES   OF  WALL   STREET. 

sell  at  once.  A  few  days  after,  the  stock  jumps  up  in 
flying  leaps  of  twenty  or  thirty  per  cent.  The  John 
Smiths  suddenly  reappear,  rubbing  their  hands  gleefully. 
"That  is  a  neat  figure  for  Northwest.  You'd  better 
sell."  "  Not  by  an  acre.  You  did  n't  put  up  the  margin, 
and  we  dumped  the  stock  into  the  market."  "  The  de'il 
you  did.  Now  that  won't  do.  I  never  got  any  notice.  If 
you  don't  compromise  in  forty-eight  hours,  paying  up  the 
difference  to  full  rates  of  to-day,  I  '11  see  what  the  judges 
have  to  say  about  it."  Most  brokers  reply  that  he  may 
go  to  law  as  soon  as  he  pleases.  An  energetic  expletive 
is  apt  to  couple  itself  with  this  permission.  Possibly  a 
suit  follows,  and  the  affair  is  prolonged  for  years  in 
the  court  by  sharp  lawyers.  But  a  settlement  is  usually 
cheaper  in  the  end,  and  the  wiser  brokers  content  them- 
selves with  simply  branding  their  customer  in  such  a 
way  that  he  finds  it  henceforth  no  easy  matter  to  specu- 
late. It  may  have  happened  that  the  shares  in  question 
were  only  sold  after  the  reaction,  and  therefore  with  great 
profit.  Ought  the  customer  to  participate  in  this  gain, 
when  he  failed  to  maintain  his  portion  of  the  contract  ? 
These  are  subtleties  of  conscience  and  logic  which  confront 
brokers  every  day,  and  make  them  more  apt  to  conciliate 
their  patrons  than  to  indulge  in  the  folly  of  anger. 

Indeed,  one  of  the  wonderful  things  in  brokerage  is 
its  development  of  philosophy.  This  wholesome  rule 
of  guidance  displays  itself,  not  merely  in  the  serenity 
with  which  reverses  of  fortune  are  met,  but  in  a  certain 
beautiful  instinct  of  forgiveness.  "  Street "  quarrels  are 
quick  mended.  The  man  who  is  denounced  as  an  infa- 


CONCERNING   STOCK-BROKERS.  125 

mous  swindler  to-day  is  accepted  as  a  confederate  in  some 
fresh  transaction  to-morrow.  Some  feuds  last  a  year ; 
the  majority,  a  week ;  not  a  few,  from  ten  hours  to  ten 
minutes. 

The  happy  Chinese  principle  of  compromise  with  that 
large  class  which  is  apt  to  be  oblivious  of  the  eighth 
clause  of  the  Mosaic  by-laws  was  first  made  fashionable 
among  Anglo-Saxons  by  Wall  Street.  When  Jerome  was 
robbed  of  his  bonds,  he  offered  to  share  with  the  appro- 
priators,  and  no  questions  asked,  if  the  deficit  should  be 
promptly  made  up.  Bank  directors  learn  their  lessons 
in  this  school  of  the  brokers.  There  is  an  amusing  story 
of  this  description  afloat.  X,  the  cashier  of  a  certain 
bank,  had  "appropriated"  a  hundred  thousand  dollars, 
and  lost  it  in  speculation.  The  day  for  the  examination 
of  the  books  was  at  hand.  In  great  fear  X  called  in  his 
lawyer,  and  asked  advice.  "  I  have  a  reputation  to  sus- 
tain. My  wife,  children,  the  church,  —  it  would  be  a 
horrible  scandal.  What  can  be  done  ? " 

"  You  can't  raise  the  money  ? " 

"No." 

"  Well,  there  is  an  easy  way  out  of  it." 

"  Eh ! "  gasps  the  cashier. 

"  Why,  you  should  simply  absorb  two  hundred  thou- 
sand more,  and  the  day  before  the  scrutiny  call  to- 
gether the  directors,  and  make  a  frank  confession." 

X  grew  interested,  asked  more  questions,  and  then 
decided  to  follow  up  the  suggestion. 

When  the  outraged  officers  met,  X  was  overwhelmed 
with  mortification.  He  was  a  defaulter  for  $  300,000. 


126  MEN  AND   MYSTEKIES   OF   WALL   STREET. 

It  had  all  gone  in  that  infernal  Harlem.  He  was  ex- 
ceedingly sorry.  "Of  course,  gentlemen,  there  is  the 
law.  You  can  expose  me.  You  can  throw  me  into 
Sing-Sing,  shock  the  community,  and  hurt  the  bank's 
credit.  It  ought  to  be  done.  I  have  not  twenty  dollars. 
But  then  my  friends  are  exceedingly  concerned.  They 
agree  —  if  you  will  keep  the  whole  affair  silent,  give  me 
a  letter  regretting  that  I  am  compelled  from  my  health 
to  resign,  and  duly  testifying  to  my  integrity  —  to 
privately  collect  one  third  of  the  amount  and  place  it 
to  your  credit.  You  can  figure  to  yourself  the  pain  such 
a  proposition  causes  me.  But  then  there  is  the  family, 
and  the  bank." 

The  directors  reflected  for  thirty-six  hours.  Then 
they  called  X  in,  and  asked  if  the  money  was  certain  to 
be  paid  over.  He  referred  them  to  a  "  friend."  All  was 
satisfactorily  arranged.  The  bank  got  back  its  one  hun- 
dred thousand,  the  cashier  retired  on  a  hundred  thou- 
sand, and  the  letter  of  regret  and  admiration  remains  in 
the  family  archives  as  evidence  of  the  incorruptibility 
of  its  worthy  but  invalid  member. 

Among  brokers  this  exquisite  anecdote  has  a  certain 
lack  of  freshness.  It  is  what  the  street  has  been  doing 
for  years.  Half  the  time,  indeed,  the  cashier  is  not  even 
suspended,  provided  he  guarantees  that  the  deficiency 
shall  be  made  good.  Tour  years  ago  a  firm,  now  dissolved, 
had  a  clerk  named  Jackson,  who  was  simply  invaluable. 
He  never  made  mistakes,  —  could  figure  up  the  most  com- 
plicated transaction  with  a  rapidity  and  cleverness  that 
invariably  redounded  to  the  profit  of  the  brokers,  how- 


CONCERNING    STOCK-BROKERS.  127 

ever  it  might  be  with  the  customers.  One  day  the  house 
had  five  hundred  shares  of  Fort  Wayne  to  deliver.  Jack- 
son sent  the  boy  out  with  three  hundred,  intending  to 
take  in  the  remaining  two  hundred  during  the  morning, 
and  so  make  the  balance  good.  Back  comes  the  office 
lad  with  a  check  for  an  amount  covering  five  hundred 
shares.  The  blunder  was  clear,  but  the  clerk  held  his 
peace,  and  before  night  distributed  the  missing  shares 
so  completely,  by  sales  here  and  there,  that  it  was  quite 
impossible  to  trace  them. 

Smith,  Jones,  &  Co.,  who  had  unwittingly  checked  for 
more  than  they  got,  soon  came  round  to  the  firm  for  an 
explanation.  The  boy  swore  he  had  delivered  five  hun- 
dred. He  had  caught  the  cue  at  once  and  would  have 
taken  his  oath  in  court.  Jackson  was  innocent.  He 
certainly  sent  over  the  whole  lot.  The  injured  brokers 
were  in  an  unhappy  plight.  Their  check  was  equivalent 
to  a  legal  receipt.  They  were  short  with  a  vengeance, 
and  with  no  redress. 

The  members  of  the  house  in  which' Jackson  was  em- 
ployed were  of  keen  honor.  Nothing  was  left  undone 
to  get  at  the  facts.  In  two  or  three  days  some  of  the 
Fort  Wayne  was  traced.  Everything  pointed  to  the  clerk. 

One  evening  they  called  him  into  the  inner  office. 
"  N"ow,  Jackson,  .we  understand  how  that  matter  oc- 
curred. It  was  a  natural  temptation.  You  have  been 
speculating,  and  you  wanted  to  do  better.  Of  course 
you  would  never  steal  from  anybody.  If  those  shares 
are  produced  by  noon  to-morrow,  there  will  be  no 
trouble.  Otherwise  —  " 


128  MEN  AND   MYSTERIES   OF   WALL   STREET. 

Jackson  was  not  a  character  for  a  novel.  He  neither 
turned  pale  nor  bit  his  lip.  They  might  do  their  worst, 
but  he  was  not  in  the  conspiracy.  Next  morning,  how- 
ever, a  package  carefully  tied  and  containing  the  equiv- 
alent of  the  missing  shares  was  found  by  the  office-boy 
when  he  came  down  town  and  unlocked  the  door.  The 
partner  sent  it  over  to  Smith,  Jones,  &  Co.,  and  Jackson 
kept  at  his  desk  without  being  troubled  with  further  an- 
noyance. Two  years  after,  when  the  house  broke  up, 
the  clerk  was  provided  with  flattering  testimonials,  and 
to-day  is  one  of  the  smartest  men  in  the  street. 

Every  day  clerks  are  discharged  for  dishonesty.  There 
is  hardly  a  house  in  the  whole  money-quarter  that  has 
not  suffered  from  peculation ;  but  it  never  goes  so  far 
as  the  police  court.  The  defaulter  is  advised  to  resign, 
receives  a  great  deal  of  sound  counsel,  couched  in  toler- 
ably strong  Saxon,  and  walks  forth  to  fields  and  pas- 
tures new,  with  no  fear  of  further  harm,  save  through 
whispers  and  the  shrugging  of  shoulders.  Even  that 
degree  of  punishment  is  seldom  inflicted,  and  the  secret 
is  lecked  up  forever.  Unquestionably  a  generous  un- 
willingness to  destroy  a  reputation  beyond  all  future 
retrieval  is  the  cause  of  most  of  these  evasions  of  jus- 
tice; but  there  are  men  understanding  stock-jobbing 
thoroughly  who  explain  the  habitual  lenity  on  other 
grounds. 

Brokers  have  a  certain  phrase  implying  a  peculiar 
injustice  to  which  customers  are  frequently  subject. 
"  Speculating  upon  orders "  is  the  technical  wording. 
A  man  wishes  a  lot  of  stock  bought.  His  broker  exe- 


CONCERNING   STOCK-BROKERS.  129 

cutes  the  order  at  69.  In  half  an  hour  the  shares  rise 
to  69|.  He  charges  his  customer  for  the  stock  at  69|, 
and  so  clears  half  of  one  per  cent,  besides  his  commis- 
sions. Or  he  agrees  to  sell  at  seller  30,  and,  believing, 
from  the  fact  that  this  stock  is  very  active,  that  his  cus- 
tomer will  probably  close  up  the  transaction  in  four 
or  five  days,  he  sells  at  a  lower  figure,  seller  10,  and 
charges  an  average  of  the  day's  bids  at  thirty  days.  This 
may  afford  a  difference  of  two  per  cent  in  favor  of  the 
broker.  Perhaps  in  eight  days,  if  not  before,  the  whole 
business  is  completed,  as  anticipated.  Technically,  the 
customer  has  not  suffered  injury ;  but  it  is  not  thought 
advisable  to  spread  abroad  the  fame  of  this  astuteness. 
There  are  hundreds  of  ways  to  speculate  upon  orders  with- 
out much  risk  of  discovery,  and  with  a  thin  gauze  of  justi- 
fication for  every  infraction  of  theoretic  honor.  The  pur- 
chases or  sales  are  always  charged  down  within  market 
rates  ;  if  usury  is  paid,  it  is  never  put  in  the  bill  above 
the  quoted  terms,  and  the  broker's  conscience  is  readily 
quieted  by  the  fact  that  he  might  have  been  compelled  to 
pay  all  that  he  asserts  that  he  paid,  the  difference  being 
due  to  his  superior  cleverness.  As  the  customer  does 
not  attempt  to  remunerate  him  for  that,  he  ought  not  to 
have  the  profit  of  it.  All  these  neat  side-transactions 
are  known  to  the  employees.  Frequently  they  are  de- 
moralized by  them.  And  if  the  human  nature  of  a  brok- 
er's clerk  grows  weak,  and  he  occasionally  makes  slips 
of  the  pen  whereby  his  pocket  is  benefited,  it  is  human 
nature  in  the  broker  to  condone,  lest  his  speculations  on 
orders  should  be  brought  to  light  in  unpleasant  ways. 


130  MEN  AND   MYSTERIES   OF  WALL   STEEET. 

It  is  asserted  that  this  is  one  of  the  most  forcible  mo- 
tives for  abstention  from  criminal  procedure.  Some 
outsiders,  who  have  lost  money,  go  so  far  as  to  insist 
that  even  the  most  respectable  houses  have  secrets  that 
are  all  the  better  for  remaining  secrets.  This  is  probably 
pure  prejudice.  At  all  events,  with  the  better  class  of 
brokers,  there  is  probably  not  so  much  trickery  as  in 
other  leading  pursuits.  Between  themselves  members 
of  the  Stock  Exchange  are  peculiarly  honorable.  Up  to 
1865  only  three  brokers  had  been  expelled  from  the 
Boards,  one  for  misstating  the  price  of  Hudson  to  a  cus- 
tomer, another  for  giving  checks  on  a  bank  where  he 
had  no  deposit,  and  the  last  for  forgery.  Indeed,  the 
whole  influence  of  the  government  of  the  Exchange  is 
thrown  against  the  least  indications  of  financial  irregu- 
larity, and,  under  President  Neilson,  the  lines  have  been 
drawn  with  far  greater  rigidity  than  at  any  previous 
period. 

Thus  far  we  have  omitted  mention  of  a  very  impor- 
tant feature  of  the  street.  During  the  old  days  of  the 
war  a  casual  visitor  in  Broad  Street  at  the  twilight  hour 
would  have  observed  outside  of  the  Stock  Exchange, 
upon  the  pavement,  a  crowd  almost  as  large  as  that 
within,  bidding  with  even  fiercer  emphasis  and  with 
less  decorum,  —  cigar-smoke  mingling  freely  with  the 
shouting,  —  queer  habiliments,  queer  faces,  the  Jew  phys- 
iognomy predominating  over  the  Gentile.  That  was  the 
once  powerful,  the  obstreperous,  burly,  ancient  "  outside  " 
Board,  whose  roof  was  the  sky,  whose  offices  were  in  their 
pockets,  whose  aspirations  were  boundless,  and  whose 


CONCERNING   STOCK-BROKERS.  131 

lives  were  an  incessant  romance.  One  reason  for  their 
decadence  is  to  be  found  in  the  Brokers'  telegraph  and 
the  monopolizing  tendencies  of  speculation.  Another 
cause  of  their  recent  disappearance  was  undoubtedly  the 
establishment  of  the  National  Stock  Exchange,  whose 
room  is  on  the  opposite  side  of  Broad  Street.  This  organi- 
zation, the  outgrowth  of  the  temporary  exclusion  of  Erie 
from  the  call  at  the  Eegular  Board,  has  acquired  a  defi- 
nite position  since  the  old  Open  Board  ceased  to  exist.* 
Solid  brokers  are  wont  to  scoffingly  declare  that  it  repre- 
sents some  hundred  millions  of  defunct  capital,  its  mem- 
bers being  mainly  street  bankrupts  who  have  lost  credit 
and  standing  by  unfortunate  speculations.  In  street 
argot,  they  are  "  snipes  "  and  "  lame  ducks."  But  this  view 
is  not  destitute  of  prejudice.  In  fact,  the  new  Exchange 
is  a  composite  body  with  its  future  before  it,  and  a  modest 
judgment  will  not  overlook  the  truth  that  Fortune  in 
our  great  money-mart  is  a  very  fickle  goddess,  and  that 
the  most  successful  men  in  all  new  countries  are  those 
who  have  known  failure  and  risen  superior  to  it.  Their 
greatest  obstacle,  however,  is  to  be  found  in  causes 
which  we  have  already  noted,  and  which  have  proved 
signally  efficient  in  clearing  the  pavement  of  its  former 
habitues. 

*  The  organization  of  this  Board  dates  with  February  7,  1869.  The 
dealings  are  in  railroad  stocks  and  a  few  of  the  more  active  mining  and 
petroleum  shares.  The  admission  fee  is  $  500.  The  President  is  A.  L. 
Mowry.  The  second  Vice- President  calls  the  stocks,  and  receives  $  5,000 
a  year.  Many  members  of  the  Gold  Board  are  on  the  roll-call  of  this 
Exchange.  The  total  of  members  is  about  three  hundred. 


132  MEN  AND  MYSTERIES   OF  WALL  STREET. 

The  story  of  "  outside  "  brokerage  cannot  be  written 
in  these  pages,  but  it  would  be  found  full  of  thrilling 
and  amusing  chapters.  Every  great  stock  market  has 
had  this  fringe  of  speculation  clinging  to  its  surface  like 
barnacles.  It  has  been  the  school  of  many  famous  op- 
erators. Its  wit  is  pungent,  its  schemes  wild  in  dar- 
ing, its  courage  and  tenacity  wonderful  "Whatever  is 
piquant  and  coarsely  racy  in  street  argot  had  its  birth 
here. 

What  is  broker  argot  ?  It  is  half  technicalities,  half 
slang.  Brokers  have  this  in  common  with  the  liberal 
professions,  —  they  deal  in  a  dialect  which  is  caviare  to 
the  multitude.  Nobody  buys  coffee  or  copper,  teak- wood 
or  tea-chests,  for  purposes  of  profit,  without  a  tolerable 
insight  into  trade-marks,  ways  of  sale,  and  ordinary 
merchant  "  shop  "  talk  But  mankind  goes  to  its  doc- 
tors, lawyers,  architects,  chemists,  stock-brokers,  with  a 
distinct  feeling  of  ignorance,  and  a  consciousness  that  an 
assumption  of  knowledge  would  be  extra-hazardous  un- 
der the  circumstances.  Very  clever  money  men,  unless 
they  have  taken  lessons  in  the  school,  will  find  them- 
selves beyond  their  depth  in  attempting  fluency  in  Wall 
Street  jargon.  Ordinary  amateur  speculators  are  as 
amusing  as  Mrs.  Malaprops.  For  although  constant  iter- 
ation has  made  certain  phrases  familiar,  yet  there  is  a 
subtle  something  in  the  intercourse  of  habitual  deal- 
ers in  stock  which  renders  a  counterfeit  distinctly  recog- 
nizable. 

Street  argot  is  like  other  argot.  It  is  mainly  the  out- 
growth of  necessity.  In  sale  or  purchase,  such  abbre- 


CONCERNING  STOCK-BROKERS.  133 

viations  as  "  Cash,"  "  Eegular,"  "  Buyer  30,"  "  At  the  Open- 
ing," "About,"  "Sold," '"Ten  up,"  with  their  endless 
variations,  are  phrases  without  which,  or  without  some 
similar  abbreviations  of  speech,  a  large  stock  market 
would  be  impossible.  Values  change  with  such  rapidity, 
new  tactics  and  strategy  must  be  assumed  so  suddenly, 
that  a  systematized  and  routine  vocabulary  is  as  essen- 
tial as  the  keys  of  a  piano  to  the  musician.  Many  of  the 
sale  phrases  of  the  Boards  have  already  been  incidentally 
given ;  others  will  presently  be  explained.  But  there 
is  a  great  mass  of  jargon  which  does  not  strictly  belong 
to  this  specific  field.  Every  style  and  manner  of  brok- 
erage has  its  name.  Every  shade  and  flavor  of  specula- 
tion —  the  artifices,  frauds,  deceptions,  of  the  business  — 
are  generally  nicknamed  and  gibbeted  with  an  epithet. 
Some  of  this  jargon  owes  its  origin  to  'Change  Alley  and 
the  Paris  Bourse.  Much  is  essentially  American.  Al- 
ways more  piquant  than  select,  racy,  rank  with  a 
certain  street  flavor  like  the  perfume  of  hostelries,  some- 
times cruel,  gross,  harsh,  —  it  presents  a  strong  fusion 
of  the  coarseness  of  money-getting  with  the  Man  and 
vivaciousness  of  successful  speculation.  It  would  be 
useless  to  attempt  a  complete  glossary.  There  are  words 
of  a  day,  as  well  as  the  picked  phrases  of  centuries. 
For  stock-dealers  are  the  keenest  men  in  the  civilized 
hemispheres,  and  no  possible  variation  or  new  shuffle  of 
cards  but  finds  some  one  witty  enough  to  pinion  it  with 
an  appropriate  epithet.  Many  of  the  phrases  which  we 
subjoin  have  already  been  explained  in  connection  with 
the  machinery  of  speculation. 


134  MEN  AND   MYSTEKIES   OF  WALL   STREET. 

A  "  break  "  in  the  market.  Where  stock  is  kept  up  by 
artificial  means,  and  a  money  stringency,  or  similar 
cause,  makes  it  difficult  to  carry  the  load,  the  attack 
of  a  bear  clique  or  the  actual  inability  of  holders  will 
produce  a  decline  in  value.  The  market  "breaks"  down. 

Ballooning.  To  work  up  a  stock  far  beyond  its  intrinsic 
worth,  by  favorable  stories,  fictitious  sales,  or  other 
cognate  means. 

Block.  A  number  of  shares,  say  5,000  or  10,000,  massed 
together,  and  sold  or  bought  in  a  lump. 

To  "  buy  in."  The  act  of  purchasing  stock  in  order  to 
meet  a  "  short "  contract,  or  to  enable  one  to  return 
stock  which  has  been  borrowed. 

"  Carrying  "  stock.  To  hold  stock  with  the  expectation 
of  selling  it  at  an  advance. 

Clique.  A  combination  of  operators,  controlling  vast 
capital,  in  order  to  unduly  expand  or  break  down  the 
market. 

Conversions.  Bonds  are  frequently  issued  with  a  pro- 
vision whereby  they  can  at  any  moment  be  exchanged 
for  equivalent  stock.  Such  securities  are  called  "  con- 
vertible," and  the  act  of  substitution  is  styled  "  con- 
version." 

Corners.  When  the  market  is  over  sold,  the  shorts,  if 
compelled  to  deliver,  find  themselves  in  a  "  corner." 
The  modus  operandi  is  detailed  in  Chapter  VI. 

Collaterals.  Any  kind  of  Wall  Street  values  given  in 
pawn,  when  money  is  borrowed. 

"  Cover"  to  " cover  ones  shorts"  Where  stock  has  been 
sold  and  the  market  rises,  the  seller  buys  where  he 


CONCERNING  STOCK-BROKERS.  135 

can,  in  order  to  protect  himself  on  the  day  of  de- 
livery. This  is  "  covering  short  sales." 

"  Curbstone  "  brokers.  Men  who  are  not  members  of  any 
regular  organization,  and  do  business  mainly  upon  the 
sidewalk. 

Delivery.  When  stock  is  brought  to  the  buyer  in  exact 
accordance  with  the  rules  of  the  Stock  Exchange,  it  is 
called  a  "  good  delivery."  When  there  are  irregulari- 
ties,—  the  shares  being  of  unacceptable  issues,  the 
power  of  attorney  not  being  satisfactory,  or  in  some 
way  the  rules  of  the  Exchange  are  contravened,  —  the 
delivery  is  pronounced  bad,  and  the  buyer  can  appeal 
to  the  Board. 

Differences.  The  price  at  which,  a  stock  is  bargained  for 
and  the  rate  on  day  of  delivery  are  usually  not  the 
same.  The  variation  is  known  as  the  "difference," 
and  occasionally  brokers  pay  over  this  money  balance 
instead  of  furnishing  the  stock.  Such  cases  are  ex- 
ceedingly rare,  notwithstanding  public  opinion  to  the 
contrary. 

A  "  drop  "  in  a  stock  is  equivalent  to  a  "  break,"  except 
that  it  may  possibly  be  due  to  wholly  natural  causes. 

Duck ;  Dead  Duck ;  Lame  Duck.  Phrases  as  old  as  the 
London  Stock  Exchange.  The  "Lame  Duck"  is  a 
broker  who  has  failed  to  meet  his  engagements ;  and 
a  "Dead  Duck"  is  one  who  is  absolutely  bankrupt 
past  all  recovery.  If  he  haunts  the  street,  it  is  as  a 
"  curbstone  "  broker. 

Forcing  Quotations,  is  where  brokers  wish  to  keep  up  the 
price  of  a  stock,  and  to  prevent  its  falling  out  of  sight. 


136  MEN  AND  MYSTEKIES   OF  WALL  STKEET. 

This  is  generally  accomplished  by  a  small  sale,  or  by 
"  washing." 

Flat.  This  term  is  used  where  money  or  stocks  are  lent 
without  interest. 

A  "flyer"  is  a  small  side  operation,  not  employing  one's 
whole  capital.  It  is  nearly  equivalent  to  what  is 
ordinarily  known  as  a  venture. 

Gosling.     A  Lame  Goose. 

Gunning  a  stock,  is  to  use  every  art  to  produce  a  "  break," 
when  it  is  known  that  a  certain  house  is  heavily  sup- 
plied, and  would  be  unable  to  resist  an  attack 

Gutter  Snipes.     Curbstone  brokers. 

Holding  the  market,  is  to  buy  sufficient  stock  at  the 
Boards  to  keep  the  price  from  declining. 

Hypothecating.     Putting  up  "  collaterals." 

Jobbers.  Used  only  conventionally  in  Wall  Street.  In 
London  it  is  the  equivalent  of  an  operator. 

Josh.  A  word  shouted  at  the  Exchange  in  order  to  wake 
up  a  sleepy  member. 

Kite-Flying.  Expanding  one's  credit  beyond  wholesome 
limits. 

A  "  let  up."  Employed  when  an  artificial  pressure  upon 
money  or  any  other  cause  leading  to  a  stringency  in 
the  loan  market  suddenly  disappears.  When  the  high 
prices  of  a  corner  cease  on  account  of  the  clique's 
withdrawing,  the  same  phrase  is  used. 

Load.     To  "  load  "  one's  self  with  stock  is  to  buy  heav- 

iiy- 

Long  in  stocks.  When  a  man  is  carrying  a  stock  for  a 
rise. 


CONCEENING   STOCK-BROKERS.  137 

Milking  the  street.  The  act  of  cliques  or  great  operators 
who  hold  certain  stocks  so  well  in  hand  that  they 
cause  any  fluctuations  they  please.  By  alternately 
lifting  and  depressing  shares,  they  take  all  the  floating 
money  in  the  market. 

An  "  off"  market,  is  where  prices  have  fallen  either  in  a 
week,  a  day,  or  even  an  afternoon. 

"  Out"  got  " out "  of  stock.  When  an  operator  has  rid 
himself  of  a  certain  line  of  stock. 

To  "pass  "  a  dividend,  is  a  euphemism  adopted  by  di- 
rectors of  corporations  to  express  an  act  which  in 
ordinary  English  would  be  called  not  passing  a  divi- 
dend. In  other  words,  a  dividend  is  said  to  be  passed 
when  the  directors  vote  against  declaring  it. 

A  Point.  A  theory  or  a  fact  regarding  stocks  on  which 
one  bases  a  speculation. 

Pool.  The  stock  and  money  contributed  by  a  clique  to 
carry  through  a  corner. 

Saddling  the  market,  is  to  foist  a  certain  stock  on  the 
street. 

Salt  down  stock,  is  to  buy  and  hold  for  a  long  period.  It 
is  nearly  the  equivalent  of  investment. 

To  "  sell  out "  a  man,  is  to  sell  down  a  stock,  which  an- 
other is  carrying,  so  low  that  he  is  compelled  to  quit 
his  hold,  and  perhaps  to  fail. 

A  Sick  market ;  the  market  is  III.  When  brokers  very 
generally  hesitate  to  buy.  Generally  the  consequent 
of  previous  over-speculation. 

Sliort.     When  one  has  sold  stock. 

Spilling  stock.     When  great  quantities  of  a  stock  are 


138  MEN   AND   MYSTERIES   OF  WALL   STREET. 

thrown  upon  the  market,  sometimes  from  necessity, 

often  in  order  to  "  break  "  the  price. 
Swimming  market.      The  opposite   of  a   sick  market. 

Everything  is  buoyant. 
"  Ten  up"  the    phrase  used  at  the   Boards   when  a 

broker's  ability  to  keep  his  contracts  is  questioned. 

It  means  that  a  deposit  of  ten  per  cent  on  the  selling 

value  of  the  stock  bid  for  must  be  put  up  before  the 

contract  can  hold  good. 
Traps.    An  almost  obsolete  phrase  for  broken  fancy 

stocks,  depreciated  railroad  securities,  etc. 
Twist  on  the  shorts.     A  clique  phrase  used  where  the 

shorts  have  undersold  heavily,  and  the  market  has 

been  artificially  raised,  compelling  them  to  settle  at 

ruinous  rates. 
To  Unload,  is  to  sell  out  a  stock  which  has  been  carried 

for  some  time. 
Washing,  is  where  one  broker  arranges  with  another  to 

buy  a  certain  stock  when  he  offers  it  for  sale.     The 

bargain  is  fictitious,  and  the  effect,  when  not  detected, 

is  to  keep  it  quoted,  and,  if  the  plotters  buy  and  sell 

the  stock  to  a  high  figure,  to  afford  a  basis  for  bona  fide 


Watering  'a  stock,  is  the  hydraulic  artifice  employed  by 
modern  managers  to  double  the  quantity  of  a  stock 
without  improving  its  quality. 

To  wipe  out  an  operator,  is  to  entangle  him  in  trans- 
actions until  he  loses  his  footing  and  fails  utterly.  It 
is  one  of  the  malignancies  and  cruelties  of  the  street. 


o 


HABITS   AND   HUMORS    OF   "THE    STREET."  139 

1 


CHAPTER    VIII. 

HABITS  AND   HUMORS   OF   "THE   STREET." 

NE  of  the  finest  characteristics  of  brokers  is  their 
generosity.  There  are  few  mean  men  in  and  around 
Broad  and  Wall  Streets.  The  miser  instinct  is  impossible. 
Dealing  with  money  values  constantly,  they  attach  to 
them  more  accurate  ideas  than  is  the  wont  of  portions 
of  the  outside  world.  They  know  that  greenbacks  are 
for  use,  and  although  in  no  region  are  there  such  oppor- 
tunities for  making  the  most  of  every  dollar,  there  is 
probably  not  a  community  so  liberal  and  free-handed,  so 
considerate  and  kindly,  in  the  employment  of  its  surplus 
resources.  They  lend  to  friends  with  a  superb  care- 
lessness for  receipts  or  times  of  payment.  They  give 
largely  to  charities.  Churches  in  need  of  funds,  colleges 
seeking  new  endowments,  benevolent  institutions  that 
do  not  care  to  imitate  Mliller's  "  Life  of  Trust,"  send  their 
broadcloth  beggars  into  the  down-town  offices  by  swarms. 
Every  great  banking-house  has  a  host  of  such  applicants. 
Sometimes  brokers  will  mass  their  benefactions  in  one 
great  gift,  like  Messrs.  Trevor  and  Colgate,  who  placed  two 
hundred  and  eighty  thousand  dollars  to  the  credit  of  a 
Baptist  church  at  Yonkers  not  many  months  ago.  Others 
distribute  their  largesses  more  evenly,  and  the  number 
of  those  who  have  bought  certificates  of  life-membership 


140  MEN  AND   MYSTERIES   OF  WALL   STREET. 

in  Bible  and  Missionary  societies  is  simply  legion.  They 
take  the  certificates  at  par,  and  neither  sell  nor  employ 
them  as  collaterals.  But  it  is  not  merely  in  what  we 
may  perhaps  call  routine  charities  that  brokers  evince 
their  munificence.  The  instances  are  common  of  young 
men,  just  breasting  the  tide  of  luck  or  loss  as  operators, 
who  support  mothers  or  invalid  fathers  in  elegance,  send 
their  brothers  to  college  and  their  sisters  to  the  musical 
conservatories  of  Germany.  A  painful  phase  of  broker- 
age is  that  final  winding-up  of  a  hard-fought  career 
by  an  unexpected  inability  to  meet  one's  contracts. 
"  Jones  lusted  "  passes  from  mouth  to  mouth.  The  Vice- 
President  hammers  the  tumult  around  the  table  into 
silence.  "  Gentlemen,  Mr.  Paul  Jones  is  unable  to  fulfil 
his  contract  with  Make  &  Mendum,  and  I  have,  there- 
fore, to  buy  10,000  shares  of  Erie  under  the  rule."  Then 
the  auctioneer  biddings  follow  in  swift  succession  from 
the  rostrum.  When  all  is  bought,  the  difference  between 
the  rate  of  bargain  and  the  purchase  price  is  charged  to 
the  defaulting  member,  and  until  he  satisfies  this  debt 
he  is  "  suspended."  Very  possibly  it  may  amount  to  a 
sum  beyond  his  crippled  resources,  and  the  broker  may 
not  only  be  irrevocably  ruined,  but  the  anxieties  to  which 
it  gives  birth  may  bring  on  nervous  prostration  and  dis- 
ease. Such  calamities  frequently  come  even  without  fail- 
ure, when  dealers,  by  the  chances  of  the  market,  have 
lost  their  last  margin  of  capital.  In  such  an  event  the 
impecunious  or  broken  brokers  receive  assistance  in  mis- 
fortune from  the  Society  of  Mutual  Eelief,  which  has 
long  been  an  institution  of  the  Stock  Exchange.  Thor- 


HABITS   AND    HUMOES    OF   "THE   STREET."  141 

oughly  independent  of  the  business  organization  in  its 
officers  and  government,  this  association  includes  in  it- 
self almost  every  member  of  the  Board.  The  yearly 
assessment  is  twelve  dollars,  but  one  can  commute 
for  a  life-membership  by  payment  of  two  hundred  dol- 
lars. Although  comparatively  few  brokers  have  availed 
themselves  of  the  privileges  of  the  association,  yet 
necessarily  not  a  little  of  quiet  benevolence  has  result- 
ed from  this  thoughtful  scheme.  The  sick  are  cared 
for ;  the  dying  father  feels  that  in  his  burial  no  pauper 
reminiscences  will  cling  around  his  memory,  —  that  the 
widow  will  be  watched  OA^er  and  the  orphan  protected. 
The  merchants  of  New  York  who  call  stock  operations 
gambling  would  do  well  to  take  a  lesson  from  this  asso- 
ciation, instead  of  allowing  some  of  the  men  once  leaders 
in  their  ranks  to  fall  from  bankruptcy  into  pinched  dis- 
tress, with  Blackwell's  Island  as  a  not  infrequent  sequel 
There  are  two  ways  of  construing  the  golden  rule,  and 
the  street  adopts  both  renderings.  It  looks  after  its 
neighbors,  and  it  cares  not  less  for  itself.  Broadway 
tailors  glorify  their  craft  by  regal  achievements  in  the 
furnishing  forth  of  their  broker  customers.  Their  bills 
are  long,  but  they  never  encounter  long  faces  on  present- 
ing them  for  payment.  Some  of  the  Broad  Street  oper- 
ators are  unique  in  the  elegance  of  their  attire.  John 
Blooclgood,  one  of  the  most  dashing,  incisive,  and  bril- 
liantly successful  of  speculative  brokers,  bears  the  just 
appellation  of  the  Beau  Brummel  of  Wall  Street,  on  ac- 
count of  his  superiority  in  this  not  ignoble  rivalry.  Good 
lunches  as  well  as  good  dinners  are  thoroughly  appreci- 


142  MEN  AND   MYSTERIES   OF  WALL   STREET. 

ated  at  the  Stock  Exchange.  Delmonico  caters  in  Broad 
Street.  Occasionally  a  party  of  brokers  will  open  a 
lunch  account,  investing  a  few  hundred  dollars  in  stocks, 
and  charging  the  gain  or  loss  to  wine,  cigars,  and  oysters. 
When  men  speculate  for  their  stomachs,  they  are  apt 
to  win;  and  the  balances  of  this  curious  account  are 
often  large  enough  to  allow  of  an  intermittent  "  spread  " 
up  town.  About  nightfall  the  Nicholson  pavement 
fronting  the  Sub-Treasury  and  flanked  by  the  Eegular 
and  National  Exchanges  is  lined  by  hacks.  A  few  are 
private,  but  the  larger  proportion  wait  for  chance  pat- 
ronage. Brokers  who  have  made  lucky  strokes  during 
the  day,  and  are  in  good  humor  with  the  world  at  large, 
button  their  coats  gayly,  pick  out  their  carriage,  step  in 
with  a  nod  to  the  Jehu,  and  bowl  away  up  Broadway  and 
the  Avenue  to  Vanity  Fair.  Some  find  an  excuse  for  the 
extravagance  in  desperation  itself ;  holding  that  if  they 
have  just  lost  nine  thousand  nine  hundred  and  ninety 
dollars,  they  cannot  do  better  than  toss  the  driver  an  X. 
and  so  even  the  deficit  up  to  ten  thousand.  There  are  a 
great  number  of  speculative  hack  "  pools."  One  firm,  in 
recently  taking  annual  account  of  stock,  found  itself 
minus  five  thousand  dollars  through  transactions  looking 
to  a  constant  supply  of  funds  for  carriage  hire.  This 
was  not  as  profitable  as  the  lunch  ventures. 

It  is  impossible  to  treat  of  all  the  peculiarities  of  the 
Stock  Board  without  becoming  inconsecutive.  There  are 
not  a  few  independent  operators  who  are  what  may  be 
styled  "  free  lances."  They  have  abundant  capital,  and 
watch  the  chance  turns  of  the  daily  market  for  large 


HABITS   AND   HUMOES    OF   "THE   STKEET."  143 

profits.  They  buy  or  sell  at  one  session,  and  cover  either 
at  the  next  call  or  in  the  Long  Eoom.  A  gain  of  one 
quarter  or  one  half  per  cent  on  the  sale  price  of  shares 
satisfies  them;  and  the  opportunities  for  a  tolerably 
safe  speculation  are  extremely  frequent.  Any  finan- 
cial report  in  the  commercial  column  of  the  daily  pa- 
pers will  show  variations  between  morning  and  after- 
noon. Thus,  on  the  29th  of  November,  1869,  New  York 
Central  and  Hudson  Consolidated  Stock  sold  at  eleven 
A.  M.  for  78.  By  three  P.  M.  it  was  quoted  at  76.  Had 
a  block  of  10,000  shares  been  sold  in  the  early  part 
of  the  day  and  bought  in  later,  $  20,000  would  have 
been  cleared.  Of  course,  so  large  an  operation  would 
have  been  apt  to  miscarry,  unless  the  market  was  very 
firm  at  first,  and  correspondingly  weak  at  the  close. 
But  transactions  of  a  lighter  calibre  are  by  no  means 
unsafe.  December  1  we  find  that  400  shares  of  Toledo 
and  Wabash  sold  for  60  at  first  call,  and  that  at  the 
second*  board  100  were  bought  at  58  and  300  at  57|. 
If  this  was  the  manipulation  of  the  same  operator,  he 
must  have  made  $  837.50.  December  27,  30,000  New 
York  Central  and  Hudson  Eiver  Consol.  sold  at  early 
board  for  81|,  and  1,400  were  bought  back  at  one 
p.  M.  for  81^.  Out  of  this  change  of  five-eighth  per 
cent  $875  was  the  profit.  The  next  day  Pacific  Mail 
sold  for  47-|-  and  46£  ;  New  Jersey  Central  for  92|-9Qi. 
These  vibrations,  perpetually  recurring,  are  the  source 
of  hundreds  upon  hundreds  of  lucky  hits.  Naturally 
there  are  numerous  workers  in  this  rich  mine,  some 
with  far  less  capital  than  assurance.  These  latter  form 


144  MEN   AND   MYSTERIES   OF  WALL   STREET. 

an  outlying  fringe,  to  which  the  slang  of  the  street  has 
given  the  expressive  term,  borrowed  from  the  army, 
of  "bummers."  An  eighth  or  a  quarter  satisfies  them. 
If  they  make  a  fortunate  stroke,  they  rest  upon  their 
laurels,  loitering  about  the  Long  Koom  or  before  the 
Vice-President's  pulpit  for  days  after,  ready  to  try  an- 
other "  flyer  "  if  the  chance  comes,  or  to  indulge  in  every 
description  of  tomfoolery,  if  the  bidding  is  dull.  They 
are  the  betes  noires  of  more  sober  brokers,  and  the  addi- 
tions their  wild  exploits  make  to  the  semiannual  bal- 
ances of  the  Eoll-Keeper  average  tens  of  thousands  of 
dollars. 

An  exceedingly  ingenious  device  of  some  of  the 
younger  men  of  this  class  consists  in  having  a  minute 
automatic  syringe  filled  with  perfumed  water  and  con- 
cealed behind  a  large  signet-ring.  Armed  with  this 
amiable  weapon,  the  broker  leans  carelessly  on  the 
shoulder  of  an  acquaintance,  and  dexterously  sends  an 
imperceptible  streamlet  of  Lubin  just  on  the  edge-  of  the 
ear.  Off  goes  his  hat,  and  down  goes  the  Vice-Presi- 
dent's mallet.  The  real  criminal  escapes,  and  the  luck- 
less member  who  has  ventured  to  take  the  law  in  his 
own  hands  is  amerced  sundry  dollars.  The  old  Open 
Board  has  witnessed  hundreds  of  such  scenes.  No  one 

knows  how  much  of  Billy  H 's  income  for  the  past 

half-dozen  years  has  been  swallowed  by  fines,  into  which 
his  unbounded  humor  has  involved  him.  One  day  he 
stood  up  some  six  minutes  behind  his  brother,  then 
Vice-President,  holding  an  umbrella  wide  open  like  an 
immense  canopy  over  the  official  head.  Suddenly  the 


HABITS   AND   HUMORS   OF   "THE   STREET."  145 

latter  turned  round,  and  the  click  of  the  gavel  kept 
company  with  "  fine,  fine,  fine,  fine,  fine,  fine,"  the  routine 
penalty  going  down  every  time  the  word  was  uttered, 
until  the  fraternal  offender  had  subsided  in  his  seat. 
Another  time  a  broker-member  of  a  young  banking- 
house,  on  a  certain  blue  Monday,  had  invited  a  customer 
just  in  from  the  country  to  go  over  with  him  to  the 
Board.  This  customer  had  lost  fifteen  thousand  dollars 
in  speculations,  and  was  meditating  the  wisdom  of  plun- 
ging still  farther  into  the  whirlpool,  —  a  tall,  dreary- 
looking  person,  with  a  down-drooping,  long,  melancholy 
face,  as  woe-begone  a  spectacle  as  one  might  see  in  a 
lifetime.  The  Open  Board  in  Broad  Street  was  pro- 
vided with  a  broad  aisle,  on  either  side  of  which  were 
dense  rows  of  arm-chairs  which  members  took  by  allot-, 
ment,  and  were  compelled  to  remain  seated  in  during 
sessions.  Down  this  aisle  went  the  broker  and  his  sad- 
visaged  friend.  The  market  was  spiritless,  and  over  the 

thin  murmur  of  offers  and  bids,  Billy  H 's  voice 

was  heard  screaming  out,  "  There  goes  one  of  Granger's 
victims  ! "  The  aspect  of  the  man,  so  unexpectedly  be- 
come the  centre  of  all  eyes,  corresponded  so  remarkably 
with  the  jest  that  the  whole  assembly  went  wild  with 
merriment. 

How  much  may  be  written  of  these  daily  escapades, 
'  of  these  absurdities,  this  overflowing  humor,  shot  like 
silver  threads  through  the  dull  and  exhausting  routine 
of  the  market !  A  member  drops  asleep ;  worn  out,  it 
may  be,  by  long  nights  over  ledgers  and  feverish  daily 
wrestlings  with  bull  or  bear.  "  Josh,"  "  Josh,"  "  Josh," 


146  MEN  AND   MYSTEEIES   OF  WALL   STREET. 

comes  roaring  up  from  a  dozen  leathern  lungs,  and  the 
broker  lifts  his  head,  and  rubs  his  eyes,  startled  from 
slumber  by  the  traditional  rallying-cry.  A  rural  stranger 
stands  within  the  railing,  invited  by  one  of  the  Board  to 
see  the  sights.  "  Hats  off/'  somebody  shouts.  The  visitor 
doffs  his  fresh-brushed  beaver  in  decorous  submission  to 
what  he  takes  for  an  official  order  to  the  whole  assembly, 
and  discovers  when  too  late  that  he  is  the  victim  of 
metropolitan  sportiveness.  To  an  outsider  this  lack  of 
dignity  is  confusing  and  inscrutable.  That  men  whose 
fortunes  or  whose  customers'  fortunes  depend  upon  an 
earnest  attention  to  every  phase  of  shares  should  break 
out  into  the  effervescence  of  a  school-boy  recess,  tossing 
"  paper  darts,"  jerking  off  hafes,  singing  "  So  say  we  all 
of  us,"  "  Shoo,  Fly,"  Opera  Bouffe,  "  John  Brown  " ;  ex- 
temporizing mock  markets ;  forsaking  the  regular  call  in 
order  to  be  onlookers  in  a  fracas  between  two  irate 
brokers,  who  commence  their  "  mill "  at  the  Board,  and 
adjourn  to  an  up-stair  committee-room,  where  the  fight  is 
carried  to  the  bitter  end  amid  the  cheers  of  a  hundred 
friendly  bystanders ;  —  that  such  scenes  should  be  so  fre- 
quent as  to  be  an  admitted  feature  of  broker  life  is  a 
puzzle  that  we  will  not  venture  to  solve.  It  is  one  of  the 
mysteries  of  Providence,  and,  like  other  mysteries,  has, 
perhaps,  a  wholesome  and  saving  element  behind  it.  In 
an  insane  asylum,  dancing  and  theatrical  exhibitions  are 
sanitary  measures.  And  the  tense  brain  fibres  of  these 
soldiers  of  finance  would  paralyze  under  the  incessant 
strain  of  business,  were  it  not  for  these  occasional  out- 
bursts. 


HABITS   AND   HUMORS   OF  "THE    STREET."  147 

Through  all  this  spontaneity  and  effervescence  of 
animal  spirits  there  runs  a  vein  of  genuine  manliness 
and  nobleness.  The  death  of  a  member  throws  a  gloom 
over  the  Board.  The  Stock  Exchange  flag  runs  up  to 
half-mast,  and  an  adjournment  is  voted  at  the  end  of  the 
first  call,  or  at  the  beginning  of  the  second  session.  Even 
the  obscurest  member  cannot  die  without  some  official 
mention  ;  and  although  the  buying  and  selling  may 
precede  or  follow  the  announcement,  there  is  a  moment 
of  breathless  silence  in  which  every  hat  is  decorously 
raised  from  head.  The  stock-brokers  were  the  first  to 
initiate  the  general  closing  of  all  business,  on  news  of 
the  assassination  of  President  Lincoln.  The  decease  of 
Ex-Secretary  of  War  Stanton  caused  an  immediate 
adjournment,  with  appropriate  resolutions.  During  the 
years  of  the  war  the  brokers  were  loyal  to  the  core. 
Men  suspected  of  hostility  to  the  government  found 
it  impossible  to  gain  admission  to  either  Board,  no 
matter  how  well  indorsed.  The  black-ball  was  as 
relentless  as  the  bullet.  As  soon  as  gold  appeared 
likely  to  be  a  perplexing  financial  element,  and  a  ba- 
rometer of  the  waning  or  rising  faith  in  the  nation,  it 
was -stricken  from  the  call. 

In  their  intercourse  with  strangers,  the  brokers  are 
exceptionally  courteous,  and  cases  where  the  boorish 
instinct  discloses  itself  are  extremely  rare.  If  Mr. 
Johnson  introduces  you  to  Mr.  Smith,  the  latter  is  at 
once  at  your  service,  and  to  every  apology  for  encroach- 
ing on  your  time  replies  that  he  is  only  too  happy  to 
be  of  use  to  any  acquaintance  of  his  friend  Johnson. 


148         MEN  AND   MYSTERIES   OF  WALL   STREET. 

The  genuinely  beautiful  feature  of  this  affability  is,  that 
Smith  really  means  all  that  he  says,  and  is  prepared  to 
prove  his  earnestness  by  long-suffering  of  even  the  most 
pertinacious  bores.  As  time  is  peculiarly  money  in 
New  York,  and  as  in  the  street  five  minutes  are  more 
precious  than  half  an  hour  in  any  other  part  of  the 
town,  all  the  more  praise  is  due  to  these  amenities  of 
brokerage. 

The  Stock  Board  appreciates  talent,  and  stands  by 
its  favorite  officers.  Mr.  Wheelock,  the  first  Vice-Presi- 
dent, has  been  connected  with  the  Exchange  for  more 
than  a  dozen  years.  Occupying  the  most  important  of 
positions,  and  constantly  compelled  to  interfere  in  dis- 
putes and  to  fine  disorderly  members,  he  rarely  gives 
offence,  and  has  no  permanent  enemies.  His  conduct 
on  stormy  days,  and  in  great  panics,  is  masterly,  and  he 
rules  the  turbulent  masses  around  the  table  with  a  gen- 
eralship and  tact  that  partakes  of  the  marvellous.  Mr. 
Broadhead,  the  Secretary,  has  had  an  even  longer  con- 
nection with  the  Board,  and  is  universally  popular. 
Under  the  new  regime,  far  greater  authority  now  rests 
with  the  official  staff  than  previously ;  and  the  arbitra- 
tion committee,  in  particular,  has  "frequently  very  deli- 
cate work  on  its  hands.  To  decide  irrevocably  upon 
cases  involving  large  sums  of  money  must  inevitably 
produce  dissatisfaction  on  the  part  of  the  losing  side ; 
and  it  is  remarkable,  in  view  of  the  absolutism  dis- 
played, that  there  should  be  so  general  an  assent  to  the 
acts  of  this  department  of  government.  There  has,  thus 
far,  been  but  one  revolt.  Kandal  H.  Foote  had  a  trans- 


HABITS   AND   HUMORS   OF   "THE   STREET."  149 

action  in  gold  with  Alexander  T.  Compton.  The  latter, 
acting  under  the  direction  of  his  partner,  a  Mr.  Pardee, 
refused  to  abide  by  the  contract.  The  case  was  brought 
before  the  committee  of  arbitration,  and  decision  made 
in  favor  of  Foote.  As  Mr.  Pardee  was  not  a  member  of 
the  Exchange,  he  carried  the  question  to  the  courts,  and 
Judge  Cardozo  instantly  issued  an  injunction  upon  the 
committee.  An  appeal  to  Judge  Barnard  resulted  in 
reaffirming  the  position  taken  by  his  colleague  on  the 
bench.  A  court  of  equity,  outside  of  the  tribunals 
selected  and  solely  authorized  by  the  State,  was  de- 
clared to  be  an  anomaly  demanding  the  interposition  of 
the  legislative  arm.  Of  course  there  can  exist  no  doubt 
of  the  justice  of  this  verdict  from  the  stand-point  of 
ordinary  jurisprudence ;  but  the  members  of  the  Board 
are  unanimous  in  their  disapprobation  of  the  rebellion 
against  the  committee.  It  is  a  denial  of  prerogative,  and 
a  departure  from  the  code  of  honor,  on  which,  indeed,  the 
whole  business  of  the  Stock  Exchange  rests.  As  a  con- 
sequence, the  by-laws  have  since  been  so  amended  that 
a  member  appealing  from  the  decision  of  the  committee 
to  the  courts  forfeits  membership  by  the  act. 

There  are  many  stray  shreds  of  facts  regarding  brokers 
and  brokerage  that  can  only  be  alluded  to  or  lightly 
touched  upon.  When  a  dealer  becomes  a  father,  he  is 
extremely  solicitous  to  keep  the  news  from  the  street. 
No  sooner  is  the  fortunate  accouchement  exploited,  than 
a  superserviceable  friend  hurries  to  the  Board,  com- 
municates the  intelligence  in  a  mock-heroic  speech,  and 


150  MEN  AND   MYSTERIES   OF  WALL   STREET. 

immediately  offers  his  hat  for  the  pennies  of  sympathetic 
members.  A  few  dollars  are  quickly  collected,  and  a 
gold  or  silver  trinket  is  purchased  as  a  testimonial  of 
affection  from  the  numerous  admirers  of  his  or  her  in- 
fantile highness,  according  to  the  sex  of  the  new-comer. 
One  modest  broker,  in  terror  of  ridicule,  sent  his  wife  to 
Paris ;  but  his  brethren  of  the  Long  Eoom  soon  pene- 
trated into  the  secret,  and  added  to  the  usual  gift  a  sum 
sufficient  to  cover  the  expense  of  a  cable  telegram  an- 
nouncing the  happiness  of  the  Stock  Board  over  the 
auspicious  event. 

The  afternoon  before  a  holiday  is  sometimes  marked 
by  special  excitement.  Speculation  often  runs  high. 
The  Exchange  is  crowded  till  dusk,  every  broker  being 
eager  to  make  a  lucky  turn,  and  so  go  home  to  his 
Fourth  of  July,  Thanksgiving,  Christmas,  or  New  Year's 
festivities  in  a  jubilant  frame  of  mind. 

It  is  astonishing  with  what  rapidity  the  shares  of  ac- 
tive stocks  circulate  from  broker  to  broker.  There  is  a 
perpetual  round  of  lending  and  borrowing.  In  sales, 
600  shares  will  frequently  do  the  work  of  2,400,  and 
give  commissions  on  twice  that  amount.  Brokers  will 
send  out  300  shares  from  their  offices  at  ten  minutes  of 
eleven,  and  receive  the  same  lot  back  from  third  hands 
in  an  hour.  Here  is,  of  course,  the  secret  of  occasional 
sales  of  the  whole  capital  stock  of  a  railroad  in  one 
day,  when  not  a  quarter  is  in  street  hands.  All  the 
great  corners  turn  upon  this  celerity  in  the  interchange 
of  shares. 

Just  before  4  P.  M.  strangers  in  Broad  Street  will  no- 


HABITS   AND    HUMORS   OF  "THE   STEEET."  151 

tice  a  great  number  of  nattily  dressed  men,  hurrying  to- 
ward the  Exchange  with  heavy  tin  boxes  in  hand.  They 
are  the  confidential  clerks  or  junior  partners  of  broker 
firms,  and  their  goal  is  the  Stock  Exchange  vault.  This 
vault  is  reputed  to  be  the  largest  in  the  world,  with 
massive  sides  and  heavy  granite  foundation.  The  in- 
terior room,  reached  by  passing  through  iron  gratings 
behind  which  officers  detailed  from  the  police  staff  are 
always  stationed,  is  one  hundred  and  six  feet  deep,  and 
about  twenty  feet  broad.  Two  hundred  and  four  safes, 
each  a  foot  and  a  half  square,  face  either  side.  In  these 
narrow  receptacles  a  large  proportion  of  the  securities  of 
the  street  is  daily  placed.  Frequently  one  of  the  boxes 
will  contain  collaterals  or  governments,  held  for  specu- 
lation, to  the  value  of  a  million,  and  the  lowest  estimate 
of  the  securities  nightly  stored  here  for  safe-keeping  is 
over  two  hundred  million  dollars. 


152  MEN  AND   MYSTERIES   OF  WALL   STREET. 


CHAPTER  IX. 

THE  GREAT  OPERATORS. 

grand  old  captains  of  other  days  were  wont  to 
1  lead  in  the  onset  and  bare  their  own  breasts  to 
the  foe.  That  was  the  way  of  Eichard  Cceur  de  lion 
and  Jacob  Little;  of  Nelson  at  Trafalgar  and  Nelson 
Robinson  in  the  stock-slaughter  times  of  '45.  Fashions 
change,  but  sometimes  almost  repeat  themselves ;  and  on 
the  great  Gold  Friday  of  September,  when  the  head  of 
one  of  the  most  famous  of  the  ring  firms  went  down  into 
the  whirl  of  battle  "  round  the  fountain,"  and  both  Clews 
and  Colgate  led  the  fierce  bear  attack,  it  seemed  as  if 
the  years  which  were  gone  were  returning  to  us.  That 
spectacle,  however,  was  a  mirage.  The  genuine  modern 
general  remains  prudently  in  the  background.  Napo- 
leon stops  at  Hougemont.  Fisk  watches  from  the  glades 
of  the  Opera  House.  Vanderbilt  haunts  the  recesses 
of  the  Bank  of  New  York.  Drew  closets  himself  in  a 
broker's  office.  The  combat  rages  from  without;  the 
telegraph  clicks  within.  At  the  Boards  messages  come 
and  go,  but  none  know  whence  or  whither.  Bids  and 
offers  boom  in  the  poisonous  air.  Surging  masses  of  at- 
tack and  defence,  rumors  which  spread  panic,  strata- 
gems and  strategy,  —  all  the  forces  of  speculative  warfare 
in  fullest  play;  while  the  great  captain  sits  quietly  in 


THE  GREAT  OPERATORS.  153 

his  arm-chair  and  reads  off  the  history  of  his  own  achieve- 
ments, as  it  flows  down  along  the  paper  tape  from  the 
automatic  machine  at  his  elbow. 

There  are  operators  and  operators.  There  are  men 
who  move  noiselessly,  spread  their  nets,  gather  in  a 
great  harvest,  retire,  reappear,  but  love  not  the  glory  of 
notoriety  nor  the  &lat  of  a  large  clientage.  Observers 
note  a  tidal  rise  or  fall,  and  ascribe  it  to  bad  crops, 
diminished  earnings,  to  stringency  of  money,  or  again  to 
those  incidental  forces  which  tend  to  appreciate  securi- 
ties. The  master-spirit  which  has  controlled  the  destiny 
of  the  market  is  content  to  leave  the  world  to  its  sur- 
mises. Of  this  class  was  Henry  Keep.  Tradition  affirms 
that  he  was  born  in  a  poorhouse,  and  worked  for  some 
years  as  an  apprentice  to  the  selectmen  of  %he  town. 
The  American  who  can  boast  of  a  similar  career  with 
Keep's  might  well  be  proud  of  a  like  nativity.  To  be- 
gin without  a  mill,  and  to  sleep  the  final  sleep  of  the 
prosperous  under  a  mausoleum  costing  a  hundred  thou- 
sand, —  that  is  what  Wall  Street  did  for  him  whom  it 
habitually  named  Henry  the  Silent.  Seldom  is  a  man 
so  happily  characterized  in  a  word.  He  dealt  in  mono- 
syllables. Whatever  is  known  of  his  stock  operations 
comes  from  his  friends,  not  himself. 

At  nineteen  he  tired  of  his  rural  apprenticeship,  and 
ran  away  to  Eochester.  There  he  secured  the  position 
of  boot-black  and  porter  of  a  hotel.  Saving  his  wages 
and  carefully  watching  his  chances,  he  saw  an  opportu- 
nity for  making  something  by  buying  uncurrent  money 
between  the  United  States  and  Canada.  After  accumu- 

7* 


MEJX     AJNL>    JVL  I  0  1  JUUUB 


lating  a  few  thousands,  he  opened  what  was  known  as 
Keep's  Bank.  By  1854  he  was  worth  $  60,000.  That 
year  he  came  to  New  York.  By  '59  his  capital  was  so 
far  augmented  that  he  was  ready  to  enter  into  that  lu- 
crative and  passionate  pursuit  of  wealth  which  attaches 
to  speculations  of  comprehensive  grasp  and  upon  the 
grand  scale.  He  purchased  great  quantities  of  Michi- 
gan Southern  when  it  was  selling  at  five  dollars  a  share. 
He  also  profited  largely  in  Chicago  and  Alton,  and  his 
operations  in  Cleveland  and  Toledo,  during  '61,  were 
very  extensive.  His  great  achievement  was  in  Chicago 
and  Northwestern.  A  "  pool  "  was  formed  in  October, 
'67.  More  than  twenty-five  thousand  shares  in  addition 
to  the  whole  capital  stock  were  purchased.  Eufus 
Hatch,  a*  well-known  broker,  was  very  prominent  in 
this  corner.  Through  his  manipulations  the  realizations 
netted  $  2,185,000  in  eight  months.  Keep's  share  alone 
was  a  million  and  a  half.  He  died  in  the  summer  of 
'69,  leaving  four  and  a  half  millions  to  his  family.  Wil- 
liam H.  Webb  belongs  to  the  same  quiet  order,  al- 
though his  operations  have  been  mainly  limited  to  a 
single  stock.  Everybody  has  some  recollection  of  the 
opposition  line  to  California.  Fares  were  put  down 
almost  to  zero.  Pacific  Mail  felt  the  competition  very 
seriously.  The  explanation  of  the  fight  has  been  vari- 
ously stated.  But  if  the  great  New  York  ship-builder 
were  disposed  to  tell  all  »  that  he  knows,  the  public 
might  learn  that  the  opposition  steamers  paid  hand- 
somely, seeing  that  their  owner  had  an  immense  short 
interest  in  Pacific  Mail,  and  the  thousands  lost  in  one 


THE   GREAT   OPERATORS.  155 

direction  were  made  up  by  tens  of  thousands  in  specu- 
lative street  profits. 

There  are  other  operators  who  hunger  for  sensations, 
who  are  perpetually  attitudinizing,  and  plotting,  and 
making  their  coups  finances.  Even  the  leader  of  leaders 
cannot  escape  this  fascination.  All  Vanderbilt's  vic- 
tories are  dramatic.  If  he  invents  a  corner,  the  stock 
flies  up  from  20  to  200,  and  for  seven  days  the  torturing 
screws  are  turned  down  tighter  and  tighter,  till  the  Stock 
Exchange  rings  with  the  clamor  of  his  victims.  If  he 
deals  in  privileges,  it  is  to  sell  a  " call"  for  50,000  shares 
of  Erie  any  time  within  four  months  at  seventy  per  cent, 
taking  a  million  dollars  as  premium.  When  summoned 
before  court,  his  memory  of  this  large  transaction,  which 
would  test  the  sanity  of  an  average  man,  fades  out  so 
completely  that  he  forgets  dates,  and  men,  and  even  his 
own  signature.  There  is  something  so  magnificent  in  a 
career  in  which  a  million  dollars  is  like  a  ten-cent  piece 
taken  by  a  shoe-blacking  gamin,  —  not  to  be  thought  of 
after,  in  the  great  influx  of  other  ten-cent  pieces,  the 
product  of  industry  and  perseverance!  He  buys  or 
holds  on  December  19,  1868,  some  130,000  shares  of 
New  York  Central  at  120,  and  in  a  night  session  of  a 
handful  of  directors  declares  an  eighty  per  cent  dividend, 
which  tosses  the  shares  to  165  within  forty-eight  hours; 
—  stripping  the  street  of  five  millions  and  a  half  with 
the  same  nonchalance  as  he  would  win  a  hundred  dollars 
of  Ben  Wood  at  "  Boston."  A  rumor  that  he  has  fallen 
from  his  Portland  clipper,  while  out  on  the  Blooming- 
dale  road,  sends  down  the  whole  market  five  per  cent. 


156  MEN  AND   MYSTEKIES   OF  WALL   STREET. 

The  news  of  his  visit  at  the  Bank  of  New  York  on  the 
day  succeeding  Black  Friday  checked  a  stock  panic 
which  would  have  been  a  whirlwind  in  an  hour.  The 
surface  biography  of  this  man  has  been  told  a  thousand 
times,  and  with  scarcely  one  fresh  item ;  but  the  genuine 
personal  history,  the  record  of  secret  schemes,  the  hidden 
plots  and  counterplots,  are  exceedingly  difficult  to  reach. 
The  real  fact  that  he  is  probably  worth  some  fifty  mil- 
lions in  property  carried  almost  in  hand  is,  after  all,  the 
great  thing.  What  possible  limit  is  there  to  the  power 
of  so  much  money  ?  Putting  aside  the  opportunities  of 
generosity  and  philanthropy,  the  speculative  energies 
involved  in  the  ownership  of  half  a  hundred  million  are 
simply  incalculable.  Commodore  Vanderbilt  is  consti- 
tutionally a  bull.  He  likes  to  survey  a  rising  market. 
He  is  so  far  a  good  citizen  that  he  takes  pride  in  making 
enterprises  "pay"  through  large  economies  and  skilful 
management.  The  spendthrift  tendencies  of  too  many 
of  our  representative  corporations  find  a  wholesome  cor- 
rective in  the  examples  which  his  career  affords  of  how 
a  watchful  regard  for  small  things  will  bring  up  divi- 
dends to  the  ten  per  cent  ideal.  Sometimes  this  saving 
habit  unites  with  foibles.  He  strips  the  brass  from  the 
Hudson  River  locomotives,  and  erects  a  brazen  monu- 
ment of  his  grandeur  upon  the  flat  ugliness  of  a  freight 
depot.  But  nothing  should  make  one  forget  the  genuine 
respect  due  to  the  ingrained  disposition  for  Appreciating 
the  value  of  whatever  property  is  intrusted  to  him. 

There  is  no  bound  to  the  evil  which  might  be  wrought 
by  such  a  man,  if  the  Napoleonic  instinct  were  asso- 


THE  GEE  AT  OPERATORS.  157 

ciated  with  an  undue  dominance  of  the  destructive  facul- 
ties. The  New  York  Tribune,  in  an  editorial,  meant  for 
the  loftiest  eulogy,  recently  described  the  conduct  of 
Vanderbilt  when  at  sea  during  a  perilous  storm.  All 
around  were  fishing-smacks,  schooners,  brigs,  —  half 
seen  in  the  mist  and  darkness,  —  which  to  strike  was  to 
destroy,  and  to  avoid  called  for  a  humanity  and  dex- 
terity which  unnerved  the  captain  of  the  ocean  packet. 
The  Commodore,  according  to  the  story,  seized  the  helm 
and  kept  the  prow  remorselessly  upon  a  straight  and 
cleaving  course,  discounting  in  a  second  the  number  of 
lives  that  would  probably  be  sacrificed,  and  of  ships 
that  would  go  down  under  the  terrible  momentum  with 
which  his  vessel  was  sweeping  on. 

Suppose,  from  some  far-reaching  purpose,  the  man 
whose  determination  has  the  hard,  pitiless  daring  de- 
picted by  the  Tribune  editor  should  see  fit  to  put  his 
total  wealth  into  greenbacks,  and  initiate  a  fierce  bear 
campaign.  It  might  be  simply  for  speculative  profit,  or 
in  order  to  gain  control  of  all  the  great  trunk  lines  in 
the  country.  No  power  in  the  market  could  withstand 
him.  He  could  sell  down  every  railway  stock  on  the 
share  list  into  the  abysses  of  panic.  He  could  coin 
wealth  out  of  each  daily  fall,  and  on  ten  per  cent 
margins  hold  majorities  of  capital  stock  of  all  the  specu- 
lative lines  from  New  York  to  Omaha,  and,  if  the  Pa- 
cific Eailroad  shares  were  on  the  call  of  the  Exchange, 
straight  through  to  San  Francisco.  By  combinations  of 
men  and  means,  such  as  would  be  easy  to  a  mind  of 
such  magnetism  and  fertility  of  invention,  the  pallor  of  a 


158  MEN  AND   MYSTERIES   OF  WALL   STREET. 

great  despair  could  be  thrown  over  the  face  of  the  whole 
country,  and  the  imagination  itself  becomes  impotent  in 
the  attempt  to  compass  the  infinitude  of  evil  which 
would  inevitably  result. 

The  full  power  of  our  imperial  capitalists  has  never 
yet  been  fairly  felt  by  the  public.  Such  occasional  diver- 
sions as  corners,  money  lock-ups,  wholesale  stock-water- 
ing, and  kindred  devices,  are  the  indications  of  forces  with 
large  reserves  of  strength.  They  illustrate,  but  do  not 
measure.  Their  influence  upon  legitimate  speculation 
has  been  ruinous,  as  being  an  incalculable  as  well  as  an 
immense  element.  A  certain  railroad  stock  is  selling  for 
40.  Its  par  value  is  50  ;  but  it  earns  no  dividends. 
If  foreclosed  and  sold  under  the  hammer,  it  would  be 
worth  in  real  estate,  rolling-stock,  right  of  way,  just 
'  ten  per  cent  discount,  neither  more  nor  less.  By  in- 
fluences not  clearly  seen  the  stock  rises  to  60.  It  has 
no  real  addition  of  value.  There  is  no  legislative  gift. 
There  is  no  improvement  in  travel,  freighting,  or  in  any 
of  the  causes  which  produce  dividends.  It  is  just  the 
same  stock.  The  brokers  and  small  operators  know  this, 
and  consequently  sell  for  future  delivery.  They  sell 
and  sell,  until  they  have  agreed  to  deliver  the  whole 
capital  stock,  say  70,000  shares.  It  ought  now  to  fall 
back  to  40.  It  ought  to  go  even  below  that  figure,  be- 
cause these  sales  indicate  want  of  confidence,  and  in  a 
rebound  all  securities  go  beyond  or  below  their  real 
worth.  Instead  of  falling,  however,  it  rises.  Long  be- 
fore the  options  on  which  sales  were  made  have  expired 
it  is  at  130.  The  street  agreed  to  furnish  70,000  shares 


THE   GEE  AT  OPEEATOES.  159 

for  $  2,800,000 ;  to  do  it,  there  is  a  necessity  to  buy  the 
stock  at  $  12,600,000.  Some  one  has  gained,  therefore, 
$  9,800,000.  That  was  very  much  the  manner  in  which 
the  last  Harlem  corner  was  manipulated.  It  required 
only  about  three  million  arid  a  half  of  money  to  strip 
the  lesser  operators  and  outsiders  of  nearly  three  times 
the  sum.  Very  properly,  the  moralist,  taking  the  side  of 
the  strong,  thinks  that  they  were  "  served  right."  But 
this  is  not  the  point  of  discussion.  What  can  be  done 
in  Harlem  can  be  done  in  anything,  —  in  fact,  is  done  in 
greater  or  less  degree,  every  month  of  the  year.  One 
man,  or  a  body  of  men,  by  buying  or  selling  in  vast 
bulks,  and  concealing  the  movement  until  all  the  neces- 
sary safeguards  have  been  used,  may  practically  con- 
trol the  Stock  Exchange.  The  only  danger  lies  in  the 
appearance  of  a  still  greater  leader,  and  a  more  powerful 
clique.  The  mere  guerilla  force  of  ordinary  speculators 
is  of  no  efficacy  whatever.  That  the  brokers  of  New 
York  feel  this  is  shown  in  their  strong  dislike  for  all 
the  king  operators.  Drew,  Vanderbilt,  Fisk,  Jerome, 
Jacob  Little,  all  the  heroes  who  still  breathe  vital  breath, 
or  have  already  gone  down  to  the  under-world,  have 
never  failed  to  be  unpopular  on  "  the  street." 

One  consequence  of  this  pervading  ill-feeling  is  that 
the  stories  of  the  great  speculators,  current  in  and  around 
the  Stock  Exchange,  must  be  accepted  with  caution.  The 
newspaper  belief  that  Vanderbilt  never  "  goes  back  on  "  his 
friends  is  not  generally  assumed  as  truthful  by  brokers. 

There  is  a  tradition  that  in  years  gone  by,  when  the 
Commodore  used  to  ride  down  to  the  old  homestead  on 


160  MEN  AND  MYSTEKIES   OF  WALL  STREET. 

Staten  Island,  he  would  now  and  then  meet  a  man  who 
courteously  offered  to  hold  his  horse.  Something  in  the 
appearance  of  the  stranger  struck  Vanderbilt,  and  he 
inquired  into  his  history.  He  had  been,  it  seemed,  a 
broker  in  "the  street"  and,  having  failed  badly,  had 
decided  to  follow  Horace  Greeley's  recommendation,  and 
take  to  country  life. 

"  If  you  will  come  to  the  city,  I  will  start  you  again," 
said  the  king  of  Central. 

Nobody  could  be  more  grateful  than  the  Staten  Isl- 
ander. He  returned  to  Broad  Street,  acted  upon  the 
Commodore's  hints,  and  in  due  time  began  to  prosper. 
Brokers  soon  had  faith  in  this  protfyt  of  the  great  man. 
They  watched  his  movements  at  the  Board,  and  bought 
or  sold  in  accordance. 

One  day  the  Commodore  was  planning  a  large  opera- 
tion. In  came  Blank,  seeking  for  a  point.  "  /  'm  buy- 
ing," said  the  railway  lord. 

Blank  buys  bravely,  —  the  street  follows.  Presently 
down  slips  the  stock,  and  the  Staten  Islander  is  hence- 
forth a  "  lame  duck."  "  One  of  the  Commodore's  stool- 
pigeons,"  is  what  the  irate  brokers  chose  to  name  him. 

Similar  incidents,  trustworthy  or  otherwise,  are  nar- 
rated by  the  dozen. 

Horace  Clark,  Vanderbilt's  son-in-law,  was  always  a 
favorite  with  the  stately  old  gentleman.  The  current 
gossip  about  his  marriage  is  not  lacking  in  amusement. 

Clark  was  high-spirited  even  when  poor.  Having  de- 
cided to  wed  the  young  lady,  he  called  upon  his  future 
father-in-law,  and,  without  preliminary,  began :  — 


THE   GREAT   OPERATORS.  161 

"  Commodore,  I  wish  your  daughter  in  marriage." 

"  Hey  ? "  quoth  the  money-king. 

Clark  repeated  his  words. 

"  You  mean,  you  want  my  money,"  growled  Vander- 
bilt,  from  his  chair. 

"You  and  your  daughter  be  d — d,"  flamed  out  the 
young  lawyer,  as  he  clenched  his  hat  in  his  hand,  and 
turned  to  leave  the  room. 

"  Hold  on,  young  man,"  said  Vanderbilt,  straightening 
himself  on  his  feet,  and  looking  wonderfully  suave  and 
paternal,  —  "  hold  on.  I  rather  like  you.  I  did  n't  say 
you  should  not  have  my  daughter.  You  may  have  her. 
I  rather  LIKE  you,  young  man." 

Clark  never  did  get  much  of  the  Commodore's  money, 
except  in  indirect  ways.  He  had  shares  in  speculations, 
and  was  always  well  supplied  with  points.  Once  Van- 
derbilt determined  to  "  use  "  him.  Clark  lost  hundreds 
of  thousands  of  dollars.  He  boldly  told  his  father-in- 
law  what  he  thought  of  it,  and  after  a  time  the  losses 
were  made  good.  This  habit  of  utilizing  everybody  has 
been  exercised,  if  we  may  trust  rumor,  on  nearly  every 
member  of  the  family.  William  Vanderbilt  is  credited 
with  having  been  favored  this  way.  One  day  his  father 
came  to  him  and  suggested  that  he  had  better  sell  Hud- 
son ;  110  was  too  high  for  it. 

"  Thank  you,"  said  the  son. 

Nevertheless,  William  concluded  to  look  about  him 
first.  The  stock  kept  steady,  with  tips  and  downs  of 
fractions  of  one  per  cent.  By  peculiar  ways  it  was  dis- 
covered that  the  elder  Vanderbilt  was  buying  quietly. 


162  MEN  AND   MYSTERIES   OF  WALL   STREET. 

William  determined  to  follow  suit.  Up  jumped  the 
stock  to  137.  It  was  a  clear  twenty-six  per  cent  in 
pocket. 

When  the  operation  was  concluded,  the  Commodore 
rode  round  to  the  son's  office. 

"  Well,  William,  how  much  did  you  lose  ? " 

"I  went  in  at  110  on  10,000  shares.  That  ought  to 
make  me  two  hundred  and  sixty  thousand  dollars  — 

"  Very  bad  luck,  William,"  quoth  the  father,  trying  to 
look  extremely  troubled,  —  "  very  bad  luck,  this  time." 

"  But  then  I  bought,  and  so  made." 

"  Hey  ?     What  sent  you  doing  that,  sir  ? " 

"  0,  I  heard  that  was  your  line,  and  so  concluded  that 
you  meant  long  instead  of  short." 

"  Ahem  ! "  croaked  Vanderbilt  p&re,  as  he  buttoned  up 
his  fur  overcoat,  and  stalked  out  of  the  open  door.  He 
has  always  had  a  high  opinion  of  William  since  that 
event ! 

It  is  hard  to  put  faith  in  the  Staten  Island  story, 
in  view  of  some  unquestioned  facts.  That  Vanderbilt 
should  occasionally  mislead  here  and  there  a  member  of 
his  patriarchal  household  seems  not  at  all  improbable,  as 
in  such  cases  he  can  always  make  amends,  and  the  policy 
may  be  very  naturally  a  sine  qua  non  in  the  success  of 
his  schemes.  But  there  are  not  a  few  examples  of  his 
steadfast  and  undeviating  friendship  toward  men  who  in 
some  way  have  happened  to  attract  him.  John  M.  Tobin 
belongs  to  this  class.  He  was  a  curbstone  operator  before 
1862  ;  rather  unlucky  in  speculations,  and  with  only  two 
or  three  thousand  dollars  capital.  Taking  the  Commo- 


THE   GREAT   OPERATORS.  163 

dore  as  a  guiding-star,  he  began  to  purchase  heavily  im- 
mediately upon  the  first  greenback  issue.  Stocks  went 
up.  He  cleared  $300,000.  Then  he  began  to  extend 
himself.  His  favorite  style  was  to  bid  seller  3  or  seller 
30.  His  imitators  followed  in  the  same  line.  The  bears 
grew  dubious  and  began  to  cover.  If  he  changed  his 
mind  about  the  prospects  of  the  stock,  the  rise  thus 
effected  by  his  tactics  enabled  him  to  sell  to  advantage. 
He  foresaw  the  crash  of  '64,  and  unloaded  the  last  of 
March.  He  habitually  "bulled"  stocks  and  "beared" 
gold.  He  shone  in  the  Harlem  corners  and  cannot  have 
made  much  less  than  three  millions.  In  the  first  cor- 
ner he  was  cunning  as  a  fox.  He  wandered  through 
Wall  Street  looking  pale  and  thin  and  weary.  His 
friends  whispered  that  he  was  broken  down  by  anxiety 
on  account  of  the  immense  amount  of  the  stock  he  was 
carrying.  The  Street  was  deluded,  and  sold  short.  In 
faro  he  is  reported  to  have  won  sixty  thousand  dollars 
of  Morrisey  in  one  night.  The  game  continued,  and  the 
gladiatorial  member  of  Congress  soon  recovered  all  his 
losses  and  much  more  besides.  Tobin  refused  to  pay 
the  balance,  and  Morrisey  never  alludes  to  the  circum- 
stance without  finding  the  English  language  unequal  to 
his  indignation. 

Morrisey  himself  is  one  of  the  Commodore's  favorites. 
He  was  unlucky  enough  to  have  imitated  the  Albany 
legislature  when  it  went  short  in  Harlem.  The  corner 
nearly  ruined  him.  One  day  he  was  driving  out  on  the 
road  at  Saratoga ;  his  horse  was  known  far  and  wide 
among  turf-men,  —  a  magnificent  pacer.  Vanderbilt  saw 


164  MEN   AND   MYSTERIES   OF  WALL   STEEET. 

the  animal  at  full  speed,  and  could  not  well  help  ex- 
pressing his  admiration.  "  So  you  like  his  gait  ?  " 
"Yes;  do  you  want  to  sell?"  "No,  but  I  will  give 
him  to  you ! "  The  king  of  Central  accepted  the  pres- 
ent, and  has  paid  for  it  a  thousand  times  over  in  the 
opportune  suggestions  and  happy  points  with  which 
Morrisey  has  been  guided  into  return  of  fortune.  In 
the  September  gold  corner  he  was  one  of  the  outsiders 
who  had  sold  to  Fisk  through  their  brokers.  While 
other  men  had  the  folly  to  enter  the  courts  and  wager 
hopeless  warfare  with  that  redoubtable  legal  limb  of  the 
Erie  Eailroad,  David  Dudley  Field,  —  Morrisey  quietly 
put  his  muscles  in  prime  working  order,  and  then  re- 
paired to  the  Grand  Opera  House.  With  some  difficulty 
he  penetrated  into  the  inner  sanctum.  The  prince  of 
Erie  was  alone. 

"  Well,  Morrisey,  what  is  it  ?  " 

"  Simply  your  check  for  $  50,000  in  that  little  matter 

of ."  The  name  of  the  broker  was  given,  but,  as  it 

is  no  part  of  the  story,  we  suppress  it. 

"I  never  bought  that  gold.  It's  only  a  lawsuit, 
any  way." 

"  Bah !  we  are  not  going  to  law.  I  Ve  evidence 
enough,  and  you  may  as  well  pay  without  more  bother." 
The  hand  of  the  ex-champion  of  the  P.  E.  was  tighten- 
ing, and  his  attitude  became  menacing. 

"  See  my  lawyer,"  whispered  the  prince,  moving  un- 
easily in  his  chair. 

"  Not  at  all.     Your  signature  is  sufficient." 

"  This  interview  had  better  be  ended.     If  you  can't 


THE   GEEAT   OPERATORS.  165 

find  the  door,  I  will  ring  for  somebody  to  show  it  to 
you."  As  the  hero  of  the  broad  gauge  spoke,  he  sprang 
to  the  bell-cord.  When  the  Eamsey  deputy-sheriffs 
called  at  the  Erie  Opera  House,  they  had  a  feeling  sense 
of  what  the  tinkle  of  a  bell  means.  Morrisey,  however, 
had  no  disposition  to  look  in  the  faces  of  a  dozen  roughs. 
Intercepting  the  movement,  and  lightly  brushing  back 
the -irritated  prince,  he  broadened  his  shoulders,  threw 
back  his  arms  in  position  and  significantly  said,  — 

"  You  will  not  ring,  and  you  must  pay." 

A  muscular  Christian  with  a  right  arm  that  could 
stun  an  ox  with  one  blow,  and  who  has  decided  upon 
a  role  that  he  would  play  out  to  the  bitter  end,  has  a 
certain  coercive  force  which  wise  men  recognize.  The 
check  was  drawn  out,  signed  and  passed  over.  What 
further  happened  is  not  known;  but  Morrisey,  if  we 
may  trust  the  story,  got  his  money  back,  and  as  yet  has 
not  been  called  upon  in  the  courts  to  explain  his  pro- 
cess of  obtaining  it. 

Wall  Street  men  are  without  equals  in  prodigal  sup- 
ply of  anecdote,  if  not  in  fecundity  of  invention.  The 
story  which  we  have  just  related  has  been  told  in 
twenty  ways,  and  may,  after  all,  be  pure  fiction.  In 
these  pages  we  vouch  for  nothing,  but  at  the  same  time 
state  nothing  that  has  not  come  from  sources  supposed 
to  be  "  reliable."  Who  knows  the  real  history  of  James 
Fisk,  Jr.  ?  The  biography  which  appeared  in  the  Spring- 
field BcpuUican  has  been  pronounced  inaccurate  by  a 
very  high  authority.  If  the  subject  of  that  sketch 
denies  its  truth,  it  would  certainly  seem  that  no  person 


166  MEN   AND   MYSTERIES   OF   WALL   STREET. 

whatever  could  be  in  a  better  position  to  know  whereof 
he  affirms.  Fortunately,  the  childhood  and  early  career 
of  the  great  are  not  so  important  as  the  events  of  maturi- 
ty. Mr.  Fisk's  maturity  dates  with  his  entrance  as  part- 
ner in  a  well-known  Boston  jobbing-house.  Here  his 
felicity  in  schemes,  magnificent  combinations,  and  gen- 
eral speculative  activity  became  so  out  of  proportion  to 
the  routine  business  of  the  firm  that  he  was  finally  .per- 
suaded to  sell  out  his  interest,  a  large  bonus  being  paid 
to  expedite  the  affair.  Having  become  once  more  his 
own  master,  Mr.  Fisk  now  wended  his  way  to  New 
York.  His  first  experience  with  bull  and  bear  was  not 
gratifying.  Two  or  three  large  transactions  in  which  he 
had  boldly  entered  resulted  so  fatally  that  he  soon  had 
not  margin  enough  to  float  a  1-62  curbstone  broker. 
Then,  according  to  veracious  rumor,  occurred  one  of 
those  dramatic  passages  which  lend  grandeur  to  human 
existence.  Seating  himself  upon  a  stoop  overlooking 
the  Stock  Exchange,  and  surveying  the  eager  sea  of 
faces  which  on  that  day  heaved  and  billowed  upon  the 
Broad  Street  pavement,  Mr.  Fisk  swore  a  mighty  oath, 
that  since  Wall  Street  had  ruined  him  "Wall  Street 
should  pay  for  it."  Shortly  after  he  took  the  Shore  Line 
route  for  the  metropolis  of  New  England.  Destiny 
threw  him  in  conversation  with  a  young  man  who,  as  it 
proved,  was  on  the  point  of  despair  from  difficulties  con- 
nected with  a  valuable  patent  belonging  to  himself  and 
his  father  as  partners.  It  was  an  invention  of  the  ut- 
most importance  to  a  vast  manufacturing  interest.  The 
mill-owners  were  using  it,  and  resisting  the  patent  in 


THE   GKEAT   OPEKATOKS.  167 

the  courts.  His  money  was  gone.  So  was  his  father's. 
Nobody  would  lend  capital,  and  the  lawyers  refused  to 
push  the  case  further.  Mr.  Fisk's  curiosity  grew  with 
each  new  revelation.  Finally  he  proposed  to  his  com- 
panion to  accompany  him  to  Boston.  The  sequel  of  the 
acquaintance  was  the  purchase  of  the  right  for  a  song 
by  Fisk  and  one  or  two  friends,  and  a  succession  of  liti- 
gations which  ended  in  a  sweeping  victory  over  the 
manufacturers.  Congress  renewed  the  patent,  and  the 
profit  of  the  second  owners  was  immense. 

The  money-centre  of  America  soon  became  aware  of 
the  opening  of  a  new  office,  with  "Fisk  and  Belden, 
brokers  "  in  flaming  gilt  over  the  doorway.  The  era  of 
Erie  was  at  hand.  To  detail  subsequent  events  would 
be  absurd.  They  are  part  of  the  national  history.  In 
injunctions  and  counter-injunctions,  in  issues  of  stock 
by  millions,  in  steamboat  speculations,  theatrical  and 
operatic  magnificences,  in  ferry-boats  and  transfer- 
coaches,  in  lock-ups  of  money,  and  lock-outs  of  sheriffs, 
Mr.  Fisk  has  obtained  a  splendor  of  reputation  which 
will  make  him  forever  memorable.  His  threat  of  ven- 
geance upon  the  street  has  been  realized  in  a  way  that 
is  comparable  only  to  the  exploits  of  Hyder  Aly.  More 
brokers  have  been  ruined  by  the  two  coups  finances  of 
1868,  and  the  upheaval  of  the  gold  market  in  '69,  than 
by  even  the  great  panic  of  '57.  Eeaders,  desirous  of 
informing  themselves  more  particularly  regarding  Mr. 
Fisk's  stock  manipulations,  should  purchase  Charles 
Francis  Adams's  "  Chapter  of  Erie."  It  tells  the  story 
with  admirable  lucidity  and  piquancy.  There  is  one  un- 


168  MEN  AND  MYSTEEIES   OF  WALL   STREET. 

pardonable  omission,  however.  Nothing  is  said  of  the 
United  States  Express  Company  speculation.  This  cor- 
poration had  a  contract  with  the  Erie  Railway.  The 
clique  went  short  in  the  stock,  and  then  suddenly  an- 
nulled the  agreement.  Down  went  the  shares  and  the 
ring  covered,  at  the  same  time  buying  heavily  for  a  fresh 
operation.  Then  the  contract  was  renewed.  Of  course 
the  profit  by  the  rise  was  as  handsome  as  the  previous 
one  by  the  fall.  Fisk  created  this  scheme.  Indeed,  he 
is  the  great  originating  mind  of  all  the  genuinely  sen- 
sational measures  of  the  Erie  party.  He  outlines  them 
rapidly  while  retiring  for  the  night,  sleeps  upon  them 
soundly,  scrutinizes  every  point  anew  on  waking,  and 
then  launches  the  thunderbolt.  Authentic  facts  of  this 
nature  are  never  without  interest  to  those  who  respect 
true  greatness. 

Daniel  Drew  holds  a  high  rank  among  the  king  oper- 
ators. Of  late  he  has  allowed  the  laurels  of  Erie  to  grace 
younger  brows,  but  his  early  successes  with  that  way- 
ward divinity  are  not  likely  to  fall  into  oblivion.  He 
fills  the  gap  left  by  the  death  of  Jacob  Little,  and  until 
recently  had  an  office  with  Daniel  Groesbeck,  who  once 
was  clerk  on  a  small  salary  under  the  Napoleonic  Jacob. 
Mr.  Drew  was  a  large  dealer  in  gold  during  the  war,  and 
has  at  times  extended  his  sphere  of  operations  over  a 
very  wide  field.  He  is  instinctively  a  bear,  and  has 
seldom  "  gone  long  "  without  regretting  it.  On  two  sep- 
arate occasions,  once  in  Michigan  Southern  and  again  in 
Harlem,  he  extricated  himself  from  serious  difficulties 
by  resorting  to  what  is  known  in  street  argot  as  "squat- 


THE   GREAT   OPERATORS.  169 

ting."  In  other  words,  he  dishonored  his  own  contracts 
and  entered  upon  a  lawsuit  to  cover  his  duplicity.  More 
than  once  since  he  has  employed  the  very  artifices  in 
Erie  against  which  in  the  case  of  others  he  had  appealed 
to  the  law.  There  are  few  jewels  of  consistency  in  Wall 
Street ! 

Mr.  Drew  is  singularly  lacking  in  popularity.  The 
belief  that  he  never  hesitates  to  sacrifice  his  friends,  if 
the  necessities  of  speculation  require  it,  is  entertained 
with  such  unanimity  in  the  money-quarter,  and  is  illus- 
trated by  so  many  anecdotes,  that  one  is  compelled  to 
acquiesce  in  it.  This  foible  is  the  more  salient  on  ac- 
count of  the  genuine  piety  of  the  man.  All  who  have 
heard  him  speak  at  Methodist  Conferences  are  struck  by 
the  fine  religious  fervor  and  earnestness  of  his  demeanor. 
In  austere  ways,  he  is  superbly  generous.  He  has  built 
churches,  founded  a  Theological  Seminary,  and  given 
away  prodigally  to  individual  charities.  Yet  he  has  the 
reputation  of  being  close  in  the  extreme.  Probably  the 
secret  of  this  amazing  contradiction  between  facts  and 
opinion  is  to  be  found  in  the  enmities  which  his  daring, 
subtle,  and  obscure  speculations  have  excited.  He  is 
the  sphinx  of  the  Stock  Market. 

The  annals  of  the  Exchange  are  rich  in  reminiscences 
of  men  who,  for  short  periods,  have  filled  the  city  with 
the  rumor  of  their  speculative  achievements. 

Sam  Hallet  is  a  notable  representative  of  this,  class. 
A  school-teacher  in  Western  New  York,  next  a  lum- 
berman, floating  rafts  of  timber  down  the  Coshocton 
and  Susquehanna  rivers,  subsequently  a  book-keeper  to 


170     MEN  AND  MYSTERIES  OF  WALL  STREET. 

Mr.  Mitchell,  famous  for  his  land  operations,  and  pres- 
ently a  banker  in  Hornellsville,  N.  Y.,  he  finally  en- 
tered the  city  of  New  York  about  his  thirty-first  year, 
and  opened  a  banker  and  broker's  office.  His  initiative 
step  was  to  draw  up  a  circular  which  soon  caught  the 
eye  of  brokers  on  account  of  its  valuable  tabular  state- 
ment regarding  stocks.  He  saw  the  inevitable  rise  in 
gold  very  early  in  the  war,  and  bought  largely.  His 
prestige  soon  became  great.  Customers  flowed  in  rap- 
idly. Long  before  his  own  capital  began  ^to  accumulate, 
he  had  vast  sums  at  his  command  from  outside  margins. 
With*  a  remarkable  financial  grasp,  and  singular  power 
in  arithmetical  combinations,  he  united  a  certain  per- 
suasiveness of  manner  which  fascinated  all  who  ap- 
proached him.  His  office  was  crowded  with  a  retinue  of 
followers.  A  mere  hint  would  make  men  buy  or  sell 
by  the  fifty  thousand.  Speculators  often  paid  very  high 
commissions  to  induce  him  to  go  to  the  Boards  and  buy 
in  person.  The  street  would  suppose  that  Hallet  was 
operating  for  himself,  and  the  stock  would  rise  propor- 
tionately. A  respectable  company  holding  property  of 
unimpeachable  value  gave  him  $  165,000  for  the  privi- 
lege of  opening  their  books  at  his  office  and  placing  his 
name  among  the  directors.  James  McHenry  credits 
him  with  having  originated  the  Atlantic  and  Great 
Western  Bailroad.  His  operations  in  the  Kansas  Branch 
of  the  Union  Pacific  Railroad  were  a  magnificent  series 
of  audacities  and  headlong  violence.  The  old  board  of 
directors  were  ousted,  and  the  contractors,  who  had  been 
at  great  expense  in  gathering  men  and  material  from 


THE    GREAT    OPERATORS.  171 

Canada  and  Europe,  were  driven  from  their  work  at  the 
point  of  the  bayonet. 

In  stocks  he  speculated  in  the  same  bold,  uncompro- 
mising, and  sledge-hammer  manner.  Though  a  bull  to 
the  tips  of  his  fingers,  he  would  sell  a  million  in  a 
day  in  order  to  break  the  market.  1863  was  his  gala 
year.  In  '64  he  attempted  to  control  several  lines  of 
stocks  at  a  time.  Boards  of  railroad  managers  changed 
their  policies  to  suit  his  strategy.  The  vision  of  a 
fortune  that  might  rank  with  Vanderbilt's  began  to  rise 
from  out  the  future,  when  Chase  and  the  April  panic 
swept  over  the  street,  breaking  him  in  forty-eight  hours, 
and  dragging  down  dozens  of  his  friends  in  the  ruin. 

Hallet's  supposed  connection  with  an  over-issue  of 
Indiana  bonds  had  previously  shattered  his  credit.  The 
Kansas  and  Pacific  Eailroad  imbroglio  added  a  fresh 
blow  to  his  reputation.  One  day,  after  his  failure  as  a 
broker,  he  found  himself  at  Washington,  full  of  schemes 
and  eager  for  Congressional  help.  On  applying  to  the 
President,  Mr.  Lincoln  passed  him  a  letter,  written  by 
an  engineer  on  the  road  named  Talcott,  in  which  Hal- 
let's  private  and  public  character  was  the  subject  of 
sarcastic  comment.  When  the  latter  reached  his  rooms, 
he  telegraphed  his  brother,  then  in  the  West,  to  seek 
out  the  engineer,  place  him  over  his  knee,  and  summarily 
chastise  him.  Hallet  went  to  Kansas  himself  a  month 
or  two  later,  and  found  that  his  order  had  been  obeyed 
to  the  letter.  The  joke,  however,  had  a  sequel.  Goaded 
by  the  insult,  and  irritated  by  the  loss  of  his  situation, 
Talcott  grew  moody.  Accident  or  intention  brought 


172  MEN   AND   MYSTEKIES   OF  WALL   STKEET. 

victor  and  victim  face  to  face.  The  engineer  drew  a 
pistol,  and  Hallet  fell  dead.  Sixty  years  would  have 
been  a  brief  term  for  a  life  of  such  wide  vicissitudes,  of 
high  excitements,  of  narrow  poverty  and  extreme  wealth, 
of  commanding  influence  and  illimitable  schemes;  yet 
he  was  only  thirty-seven  when  assassinated ! 

The  career  of  the  brothers  Jerome  has  been  marked 
by  a  boldness,  verve,  and  large  magnificence  of  view  and 
action  which  perpetually  suggest  a  parallel  with  the 
lives  of  the  more  noted  speculators  of  the  Paris  Bourse. 
Jerome  p&re  was  a  farmer  in  Onondaga  County,  one  of 
.  the  lake  districts  of  New  York  State.  Addison  G,  the 
eldest  son,  came  up  to  the  city  when  quite  a  lad,  with 
very  little  other  capital  than  that  which  belongs  to  a 
brave  heart  and  a  keen  brain.  Strolling  about  town 
with  eyes  open  and  superabundant  provincial  hopeful- 
ness, he  chanced  to  see  the  sign  of  John  Stewart,  an 
eminent  dry-goods  merchant.  Walking  straight  up  to 
the  head  of  the  establishment,  he  told  his  story  in  a  few 
nervous  words.  Mr.  Stewart  received  him  kindly,  but 
had  no  vacancy.  "  But  you  must  tiy  me.  Give  me  any- 
thing, no  matter  how  slight,  and  I'll  write  my  name  in 
your  check-book  before  I  get  through."  The  answer 
struck  the  great  dealer,  and  after  a  moment's  thought 
he  made  a  proposition  which  Jerome  instantly  accepted. 
In  three  years  he  made  his  pledge  good,  by  entering  as 
a  partner  in  the  firm.  Subsequently  he  withdrew,  and 
joined  forces  with  two  well-known  dry-goods  men ;  the 
new  house  calling  itself  Fitch,  McNeal,  &  Jerome.  They 
soon  had  a  large  connection  with  the  Southern  trade. 


THE   GREAT   OPERATORS.  173 

About  1850  their  affairs,  however,  took  an  unfavorable 
turn,  and  the  firm  was  forced  to  suspend.  Addison  lost 
everything.  Hard  pressed,  and  with  no  very  clear 
future,  he  leased  an  out-of-the-way  office  in  Wall  Street 
and  began  life  anew  as  a  broker,  with  his  sum-total  of 
capital  consisting  of  three  chairs  and  a  table,  worth  per- 
haps five  dollars  at  the  most.  Thirteen  years  after,  his 
books  showed  a  daily  business  of  five  millions,  while  his 
commissions  on  outside  orders  frequently  netted  ten 
thousand  dollars  a  week! 

There  was  a  curious  episode  connected  with  this  fail- 
ure. As  soon  as  Addison  had  met  with  some  success  in 
his  early  dry-goods'  venture,  he  sent  his  favorite  brother, 
Leonard  W.,  to  Princeton  College.  When  Leonard  was 
graduated,  he  went  to  Eochester  and  edited  the  Ameri- 
can in  that  city.  The  journal  was  of  uncompromising 
and  lively  Whig  politics.  Millard  Fillmore,  then  Presi- 
dent, took  a  liking  to  the  young  editor,  and  the  result 
was  a  consular  appointment  to  a  small  Italian  port. 
Leonard  had  been  in  Europe  a  year  or  more,  when  he 
received  a  letter  from  New  York,  in  which  Addison 
spoke  enthusiastically  of  his  prospects,  and  proposed 
that  the  two  should  enter  into  partnership.  The  idea 
fell  in  with  Leonard's  fancy,  and  in  a  very  brief  time 
he  resigned  his  office  and  started  for  Paris.  There  a 
letter  reached  him,  announcing  the  failure  of  Fitch' 
McNeal,  &  Jerome  !  His  consulship  was  irrevocably 
gone  ;  his  vision  of  a  partnership  and  prosperity  had 
vanished ;  the  outlook  was  of  the  bluest.  Nevertheless, 
Leonard  W.  was  not  easily  discomfited.  He  took  the 


steamer  for  New  York,  and  on  reaching  the  city  decided 
to  adopt  the  new  line  just  selected  by  his  brother. 
After  the  usual  ups  and  downs,  he  finally  entered  into 
partnership  with  William  K.  Travers,  under  the  firm 
name  of  Travers  &  Jerome.  This  event  dates  with  '56. 
The  new  house  operated  in  Michigan  Southern  rather 
extensively.  One  day  they  took  sides  against  the  Litch- 
fields,  who  then  had  a  large  influence  over  the  stock. 
Jerome  went  in  as  a  bear,  and  threatened  to  break 
Michigan  Southern,  even  if  it  carried  down  the  whole 
market.  As  the  shares  of  no  road  stood  firmer,  or  were 
better  regarded,  the  menace  was  laughed  at.  Had  it 
been  only  an  affair  of  stock  manipulation,  the  vaunt 
would  have  been  idle  enough.  But  Leonard  W.,  how- 
ever meagre  his  bank  account,  was  fertile  in  expedients. 
He  had  learned  the  value  of  printer's  ink  at  Eochester. 
It  now  occurred  to  him  to  put  this  immense  force  at 
work  in  New  York.  The  Herald  opened  its  columns  to 
him.  He  influenced  other  journals.  Every  day  ap- 
peared articles  predicting  a  crash.  The  country  was 
overtrading.  Credit  was  so  extended  that  it  would 
snap  into  ribbons  at  the  first  gale.  Stocks  were  ex- 
orbitantly high.  Wall  Street  was  a  gigantic  bubble. 
Half  the  shares  on  the  lists  had  nothing  but  rottenness  to 
sustain  them.  Michigan  Southern  was  a  fair  sample  of 
the  bubble  prosperity  of  the  street.  Eepeating  these 
views  in  a  hundred  new  shapes,  always  striking  at  the 
road  with  which  he  was  at  deadly  feud,  disentombing 
old  reports  of  the  Company,  analyzing  the  figures  re- 
lentlessly, and  with  a  clearness  hitherto  unknown  in 


THE   GEEAT   OPEEATOKS.  175 

New  York  finance,  he  soon  began  to  affect  public  con- 
fidence. His  articles  were  copied  from  newspaper  to 
newspaper  all  over  the  country.  Holders  began  to  sell 
their  stock.  The  terror  spread.  The  Litchfields  strug- 
gled, but  the  weight  was  too  great.  Michigan  Southern 
fell  sharply.  It  was  impossible  to  check  the  decline. 
Victorious  at  this  point,  Jerome  still  stood  by  his  bear 
role.  On  the  street  and  in  the  daily  papers  he  steadily 
persisted  as  an  alarmist.  One  day  he  was  on  the  pave- 
ment near  the  old  Stock  Exchange  talking  down  every- 
thing, predicting  universal  failure,  denouncing  almost 
every  security  quoted  on  'Change.  A  broker  stepped  up 
to  him.  "  Say  what  you  please,  the  Ohio  Life  and  Trust 
Company  is  a  good  stock  at  all  events."  The  dealer,  as 
he  spoke,  pointed  to  the  edifice  of  the  company  near  by, 
and  his  gesture  was  such  as  a  traveller  in  Egypt  might 
employ  in  asserting  the  solidity  of  the  pyramids.  "  What 
is  Life  and  Trust  ? "  asked  Jerome.  "  103,"  was  responded. 
"  I  '11  sell  a  thousand  at  50,  seller  one  year,"  quoth  Leon- 
ard. "  Take  'em,"  shouted  the  broker.  Sixty  days  after 
the  Life  and  Trust  Company  failed  for  sundry  millions, 
and  dragged,  not  only  Wall  Street,  but  the  entire  com- 
merce of  the  country  with  it.  The  purchaser  of  the 
thousand  shares  of  Life  and  Trust  compromised  at  a 
handsome  figure.  With  the  money  coming  from  this 
lucky  hit,  and  by  other  realizations  upon  short  sales, 
Jerome  felt  rich  enough  to  dissolve  partnership,  and 
shortly  after  sailed  for  Europe  on  a  two  years'  vacation. 
Meanwhile  Addison  G.  had  been  making  his  own  fight; 
was  a  bull  through  '56  and  '57,  and  came  out  of  the  panic 


ME/JM     AJNU 


with  health  and  capital  shattered.  He  used  his  expe- 
rience to  advantage,  and  by  1860  had  laid  the  foundation 
for  a  splendid  future.  He  was  one  of  the  few  men 
who  bought  largely  at  that  period  when  the  share  market 
was  at  its  lowest  ebb.  By  '62  and  '63  the  result  of  his 
prescience  disclosed  itself.  His  realizations  were  enor- 
mous. He  was  loyal  to  the  core  and  found  his  profit  in 
it.  Dealers  noticed  that  the  moment  stocks  broke  upon 
the  news  of  a  defeat  of  the  Union  forces,  Jerome  was 
always  in  the  market  as  a  buyer.  The  policy  was 
subtle,  and  not  readily  followed.  It  was  based  upon  a 
theory,  borne  out  by  facts,  that  with  every  disaster 
came  a  new  emission  of  greenbacks.  The  more  green- 
backs the  higher  prices.  Addison  coined  money  by  the 
hundred  thousand  through  these  tactics.  His  office 
swarmed  with  eager  speculators.  He  was  now  worth 
millions.  He  had  been  the  leading  spirit  in  the  organi- 
zation of  the  Open  Board,  and  was  looked  up  to  as  one 
of  the  longest  heads  in  the  street.  At  this  juncture  he 
formed  a  tacit  alliance  with  Vanderbilt.  The  latter  had 
acquired  the  control  of  the  route  from  New  York  to 
Buffalo.  Jerome  already  held  a  portion  of  the  connect- 
ing roads  beyond,  and  now  determined  to  buy  up  Mich- 
igan Southern,  and  thus  complete  a  through  line  to 
Chicago.  While  occupied  in  absorbing  the  majority  of 
the  shares,  he  was  struck  by  the  abundance  of  cash 
stock,  and  by  the  fact  that  he  had  options  out  for  nearly 
the  entire  capital  of  the  road.  The  opportunity  for  a 
corner  was  too  tempting  to  be  put  aside.  He  concerted 
his  measures,  bought  quietly  thirty  thousand  more  shares 


THE   GEEAT   OPERATORS.  177 

than  the  whole  capital  stock,  and  soon  had  the  street  in 
his  toils.  The  shares  went  up  by  flying  leaps.  He  was 
upon  the  edge  of  untold  opulence.  Just  as  he  was  be- 
ginning to  bring  the  corner  to  an  issue,  however,  he  sud- 
denly observed  a  weakness  in  the  stock.  Contracts  were 
met  promptly.  Although  he  owned  the  whole  railroad, 
everybody  appeared  to  be  supplied  with  certificates. 
The  secret  was  not  long  in  transpiring.  The  directors 
of  Michigan  Southern,  with  Henry  Keep  at  their  head, 
fearful  of  losing  their  ascendency,  had  availed  them- 
selves of  a  clause  in  an  old  charter  of  one  of  the  roads 
of  which  it  was  a  consolidation,  by  which  they  were 
authorized  to  issue  stock  at  par  for  construction  purposes. 
This  new  emission  they  had  been  furnishing  Jerome  at 
corner  rates  !  The  latter  at  once  appealed  to  the  law, 
but  in  the  meanwhile  his  affairs  were  inextricably  en- 
tangled. Stock  that  he  had  himself  bought  at  from  100 
to  112,  he  was  forced  to  sell  off  at  75  and  70.  He  lost 
a  million  by  the  blow.  Shortly  after,  he  died  from  a 
heart  trouble,  superinduced  by  excitement,  bestowing  a 
considerable  fortune  and  the  Michigan  Southern  lawsuit 
as  a  legacy  to  his  family.  He  left  a  rare  name  in  Wall 
Street.  His  friends  affirm  of  him  that  he  was  never 
known  to  allow  an  oath,  a  lie,  or  a  vulgar  jest  to  pass 
his  lips.  As  the  money-quarter  goes,  this  is  immortal 
eulogy. 

Some  time  in  '60  or  '61,  Leonard  W.  Jerome  returned 
from  abroad,  and  opened  a  new  office  in  the  street,  with 
the  firm  name  of  Jerome  &  Riggs.  Operating  very 
generally  along  the  whole  line  of  stocks,  his  interest 

8«  L 


178  MEN  AND   MYSTEEIES   OF   WALL   STREET. 

soon  centred  upon  the  Pacific  Mail  Steamship  Com- 
pany. He  took  the .  stock  when  its  selling  rate  was 
about  62,  and  carried  it  up  by  1865  to  329.  His  realiza- 
tions even  at  the  earlier  stages  of  the  rise  were  enor- 
mous. He  spent  his  money  as  freely  as  he  made  it. 
Fifth  Avenue  was  in  a  whirl  of  amazement  at  his  social 
audacities.  He  bought  a  magnificent  steam-yacht.  He 
dashed  through  Central  Park  in  his  four-in-hand.  He 
gave  dinner-parties  of  the  most  sumptuous  character. 
At  one  of  these  feasts  every  lady  guest  received  a 
bracelet  with  some  rare  jewel  pendant.  He  created  the 
Jockey  Club,  and  established  a  private  theatre  of  his  own. 

One  day  he  was  at  Newport  chatting  with  Mrs. , 

then  a  leader  of  fashion.  "  Why  don't  you  give  a  party  ? " 
inquired  Jerome.  "  Because  my  husband  can't  afford 
it."  "Pshaw!  what  will  it  cost?"  An  estimate  was 
made.  "That  is  easily  done.  I  have  a  capital  point 
in  Hudson  Eiver.  Deposit  a  few  hundred  dollars  with 
my  firm,  and  we  will  see  what  will  come  of  it."  The 
margin  was  put  up.  In  a  few  days  Jerome  sent  back 
the  money  increased  beyond  the  wildest  dreams  of 
Wall  Street  speculation.  Of  course  the  party  was  an 
immediate  sequence. 

It  was  impossible  that  such  a  man  should  not  pro- 
voke enmities  as  well  as  make  friends.  He  was  exceed- 
ingly disliked  by  a  large  proportion  of  brokers.  Some- 
times they  united  and  struck  him  hard.  But  Jerome 
could  bear  a  square  blow  without  flinching  better  than 
any  one.  His  sang-froid  was  inimitable.  After  a  hard 
day  of  ill  luck  at  every  point,  he  would  sit  down  with 


THE   GREAT   OPERATORS.  179 

his  friends  at  supper,  brimming  over  with  animal  spirits, 
telling  a  story  or  singing  a  song  with  the  gusto  of  one 
who  had  just  made  half  a  million.  He  never  acknowl- 
edged a  moment  of  despondency,  except  in  reference  to 
one  occasion.  This  happened  in  connection  with  the 
corner  in  Hudson  in  '63,  the  main  features  of  which 
have  been  described  in  a  previous  page.  Jerome  had 
made  all  his  combinations,  and,  satisfied  with  the  out- 
look, took  his  yacht  and  set  out  on  a  pleasure-trip  up 
the  river  to  West  Point.  Beginning  to  have  misgivings, 
he  steamed  back  to  the  city,  and,  reaching  the  pier,  found 
bad  news  awaiting  him.  The  scheme  did  not  work. 
Everything  was  at  a  dead  stop.  For  a  half -hour  he  was 
unmanned.  Nevertheless,  he  kept  his  own  counsels  and 
revolved  the  problem  over  and  over  till  daybreak.  By 
that  time  he  had  laid  out  a  fresh  line  of  strategy,  and 
canvassed  it  point  by  point.  Satisfied  with  the  plan,  he 
gave  his  orders,  and  went  up  to  West  Point  again.  The 
result  of  that  night  shortly  showed  itself  in  the  rapid 
culmination  of  one  of  the  most  brilliant  corners  ever 
known  in  stock  speculation. 

There  are  a  host  of  stories  afloat  about  Jerome,  illus- 
trating his  ready  wit.  One  of  them,  which  will  lose 
none  of  its  piquancy  by  suppressing  the  real  name  of 
the  party  most  interested,  is  told  in  this  wise.  He  had 
been  carrying  a  heavy  load  of  Michigan  Southern  at 
one  time,  in  anticipation  of  a  rise ;  but  somehow  the 
stock  remained  quiet.  The  way  of  throwing  it  off  with- 
out a  loss  was  not  very  apparent.  At  this  juncture 
he  happened  to  be  walking  along  Broad  Street,  when 


180  MEN   AND   MYSTERIES    OF  WALL   STREET. 

some  one  tapped  him  on  the  shoulder.  Looking  round, 
he  saw  an  old  Eochester  acquaintance. 

"  Why,  Kelley,  what  brings  you  here  ? " 

"Business.  "We  have  just  opened  an  office,  —  Kelley 
&  Cutter.  We  want  you  to  give  us  some  orders." 

Jerome  shrugged  his  shoulders.  "I'd  like  to  do  it, 
Kelley ;  but  it  would  ri't  work." 

"  Why  not,  Mr.  Jerome  ?  " 

"  0,  you  '11  never  make  money  in  the  street.  You 
can't  keep  a  secret.  If  I  gave  you  an  order  you  would 
run  off  and  tell  everybody.  All  the  brokers  hereabouts 
would  know  what  I  am  doing." 

"  I  pledge  you  my  word  that  we  will  keep  your 
orders  sacred,"  said  Kelley,  warmly. 

"  Then  there 's  another  thing,"  continued  Jerome. 
"  If  you  take  a  commission  from  me,  you  will  think 
you've  got  a  good  point.  Next  you  will  speculate. 
Then  we  shall  hear  that  you  've  '  busted.'  No,  no, 
Kelley,  it  won't  do." 

The  representative  of  the  new  firm  declared  that  his 
house  was  resolved  to  do  a  purely  commission  business, 
—  would  never  speculate,  —  was  the  house  of  all  others 
that  Jerome  ought  to  patronize. 

"  Well,  Kelley,"  said  the  other,  after  a  moment  of  deep 
reflection,  "  I  '11  give  you  a  trial.  Go  and  buy  five  thou- 
sand of  Michigan  Southern." 

Kelley  went  off  elated,  bought  the  stock,  and  whis- 
pered into  everybody's  ear  that  Michigan  Southern  was 
"  a  mighty  good  thing  to  hold.  Jerome  was  buying  by 
the  block.  There  was  a  big  rise  in  prospect." 


THE   GREAT   OPERATORS.  181 

Pretty  soon  the  market  began  to  falter.  Jerome 
&  Riggs  had  seized  upon  their  opportunity  and  quietly 
sold.  The  stock  plunged  down. 

Some  days  later  Kelley  met  his  new  patron. 

"  "Well,"  said  Jerome,  "  how  do  you  get  on  ? " 

"  Have  n't  you  heard  ? " 

"  Eh,  what 's  up  ?  " 

"Why,"  responded  Kelley,  with  a  woful  expression 
of  countenance,  "our  house  is  'busted.'  We  bought 
some  of  that  confounded  Michigan  Southern  on  our  own 
account,  and  it  swamped  us  ! " 

"  Speculated,  hey  ? "  quoth  Jerome,  with  great  concern. 
"  Now,  Kelley,  my  boy,  next  time  do  remember  my  ad- 
vice !" 

There  is  an  anecdote  about  Addison  G.  that  may  not 
inappropriately  be  told  in  this  connection. 

A  well-known  quiet  operator  had  invested  largely  in 
a  certain  stock,  —  that  of  the  Eeading  Eailroad,  if  we 
are  not  mistaken.  Not  liking  the  look  of  the  market, 
he  determined  to  sell;  but  as  he  was  carrying  ten  or 
fifteen  thousand  shares,  he  was  afraid  to  resort  to  the 
Exchange  for  fear  of  breaking  the  price.  He  knew  that 
the  elder  Jerome  was  weighted  down  by  the  same  stock, 
and  was  also  working  to  get  rid  of  it.  Here  was  a  loop- 
hole for  escape.  Going  into  the  office  of ,  the  prin- 
cipal broker  agent  of  Addison,  he  whispered,  "I  say, 
come  along  with  me."  As  soon  as  they  were  on  the 
street,  the  wary  speculator  instructed  to  accom- 
pany him  over  to  Williams  Street,  and  if  they  happened 
to  meet  Jerome,  and  if  also  the  latter  offered  to  buy 


182  MEN   AND   MYSTERIES   OF  WALL   STREET. 

Beading  within  certain  figures,  he  should  sell  him  all  he 
wanted.  The  two  sauntered  along,  and  presently  met 
Jerome,  evidently  in  a  brown  study.  Greetings  were 
exchanged. 

"  Michigan  Southern  is  looking  well,"  begins  the  plot- 
ting operator. 

"  Yes,  very  well.  Cleveland  and  Toledo  sold  hand- 
somely to-day.  Then  there  's  Heading." 

"  A  good  stock,  that.    I  '11  give  '14£  for  five  thousand ! " 

"As  you  say,  a  capital  stock.  Going  higher  too !  I  '11 
buy  any  part  of  ten  thousand  Beading  at  115,  buyer  30. 

" Sold"  screamed  the  broker,  taking  out  his  book. 

"  How 's  that  ? "  inquired  Addison,  with  admirably  as- 
sumed carelessness. 

"  Simply  that  I  have  sold  you  ten  thousand  Beading 
at  115,  buyer  30,"  said  the  broker,  pencilling  off  the  item 
as  he  spoke. 

"  All  right,"  replied  Jerome,  quite  aware  that  he  had 
been  trapped,  but  recognizing  the  force  of  the  street  rule 
which  makes  a  bargain  sacred  wherever  and  however 
made.  How  Addison  G.  extricated  himself  from  his 
double  load  of  the  stock  we  do  not  know ;  but  as  Bead- 
ing sold  up  to  128  in  the  course  of  the  year,  it  is 
pleasant  to  believe  that  he  finally  lost  nothing  by  his 
unexpected  purchase. 

The  Fordham  Bace-course  owes  its  origin  to  one  of 
the  outside  speculations  of  Jerome.  The  trains  of  the 
New  York  and  New  Haven  Bailroad  enter  the  metrop- 
olis upon  the  Harlem  track.  Justified  by  highly  satis- 
factory reasons,  the  management  of  the  company  decided 


THE   GREAT   OPEKATORS.  183 

to  secure  a  different  means  of  ingress  to  the  city,  and  a 
tacit  agreement  was  made  with  Leonard  W.  Jerome  to 
the  effect  that  if  he  would  secure  the  right  of  way  from 
the  proper  terminus  of  the  New  Haven  Eoad  clear 
through  to  New  York,  they  would  change  their  routa 
The  firm  at  once  bought  all  the  land  they  could  find 
along  a  strip  of  nine  miles  through  Westchester  County, 
up  what  is  known  as  the  Saw-Mill  River  Valley.  Some 
portion  of  their  purchase  cost  them  at  the  rate  of  $  300 
an  acre.  Meanwhile  Commodore  Vanderbilt  got  news 
of  the  movement,  bought  largely  of  the  New  Haven 
stock,  and  at  the  succeeding  election  of  directors  was 
able  to  make  such  changes  in  the  board  as  effectually 
estopped  the  change  of  base  from  the  Harlem  Line.  The 
contract  on  which  Jerome  had  acted  was  not  in  such  a 
form  as  admitted  of  litigation.  He  had  acquired  an 
immense  amount  of  real  estate  with  no  prospect  of  im- 
mediate realizations.  Then  came  the  idea  of  the  race- 
course. Not  less  than  $  100,000  was  cleared  as  net 
profit  from  that  expedient.  Another  portion  of  the 
land  was  sold  as  a  cemetery.  But  Jerome  has  the  greater 
part  of  the  property  still  on  his  hands. 

It. was  in  the  month  of  February,  1867,  that  Jerome 
met  with  his  great  disaster.  Pacific  Mail -was  always 
his  favorite.  He  had  made  it  one  of  the  most  popular 
stocks  at  the  Exchange.  During  the  year  just  named 
Leonard  was  so  thoroughly  preoccupied  by  up-town 
amusements,  the  Jockey  Club,  his  steam-yacht,  dinners, 
and  every  description  of  social  extravagance,  that  he 
neglected  his  affairs  in  the  street.  He  controlled  a  ma- 


184  MEN   AND   MYSTEEIES   OF  WALL   STREET. 

jority  of  the  shares  of  Pacific  Mail ;  the  directors,  though 
nearly  evenly  balanced,  stood  one  in  his  favor,  and  al- 
though the  annual  meeting  of  the  board  to  decide  upon 
a  dividend  was  at  hand,  Jerome  gave  himself  no  anx- 
iety. At  this  juncture  a  rapid  combination  was  effected 
between  certain  capitalists  who  were  largely  interested 
in  the  stock,  for  a  purpose  which  can  be  best  understood 
by  results.  Men  who  were  in  the  secrets  of  the  move- 
ment affirm  that  it  embodied  some  of  the  most  startling 
and  romantic  phases  of  stock  brokerage  ever  known  in 
the  street.  Brown  Brothers  &  Co.  are  credited  with 
being  especially  prominent  in  the  scheme.  An  essential 
part  of  the  Jerome  programme  was  the  declaration  of  a 
large  dividend  and  the  issue  of  a  favorable  report.  When 
the  board  came  together,  however,  the  director  upon 
whom  Leonard  relied  threw  his  vote  on  the  adverse  side. 
The  dividend  was  cut  down  to  three  per  cent,  and  the 
newly  formed  clique  sent  forth  whispers  to  the  effect 
that  the  affairs  of  the  company  were  anything  but  in  a 
satisfactory  condition.  The  news  of  the  action  of  the 
directors  spread  like  a  prairie-fire.  Pacific  Mail  dropped 
thirty  per  cent.  Leonard  Jerome  was  carrying  the  main 
part  of  his  stock  on  borrowed  margins,  and  was  wholly 
unprepared  for  the  blow.  Between  Monday  and  Satur- 
day he  fought  against  the  market  with  untiring  pluck 
and  pertinacity,  raising  $  800,000  by  sacrificing  all  his 
other  ventures,  and  not  giving  up  the  battle  until  every 
dollar  of  this  large  sum  was  melted  away  by  the  contin- 
uous decline  of  the  stock.  Then  he  sold.  The  previous 
loans,  however,  together  with  the  persistent  depression 


THE    GREAT    OPERATORS.  185 

of  the  shares,  prevented  any  considerable  realizations 
from  the  sales.  Jerome  was  now  hopelessly  crippled. 
Nothing  was  left  but  to  extricate  himself  from  the  ruins ; 
and  the  fact  that  by  the  vicissitudes  of  the  fight  he  had 
become  largely  indebted  to  certain  leaders  of  the  opposi- 
tion party  afforded  a  means  of  escape  from  what  now 
constituted  his  main  embarrassment.  This  was  the  con- 
tract, still  in  force,  by  which  he  had  bound  himself  to 
take  $5,000,000  of  a  new  issue  of  the  company's  stock. 
The  responsibility  had  been  assumed  in  the  heyday  of 
his  power,  and  the  corporation  held  his  note  for  the 
shares,  which  had  been  sold  to  him  at  twenty-five  per 
cent  below  the  then  market  price  of  Pacific  Mail.  He 
now  compelled  the  directors  to  resume  the  stock  at 
thirty  per  cent  above  the  depreciated  rates  of  the  street. 
Since  this  event,  Jerome  has  had  very  little  to  do  with 
Wall  Street  operations,  preferring  the  excitement  of 
Paris  to  the  troubled  waters  of  speculation. 

Anthony  Wellman  Morse  made  a  brilliant  reputation 
in  Wall  Street,  during  his  brief  career.  He  came  from  a 
good  family.  His  grandfather,  Major  Anthony  Morse, 
fought  at  the  battle  of  Bennington,  and  witnessed  the  sur- 
render of  Burgoyne.  On  his  mother's  side  he  was  related 
to  the  Ptev.  James  Wellman,  who  holds  an  eminent  place 
in  the  annals  of  New  Hampshire ;  to  the  Pattersons  of 
New  England  and  Maryland ;  and  to  Dr.  Russell,  one  of 
whose  kin  protected  the  regicide  judges  Goffe  and  Whal- 
ley?  _  the  latter  being  related  to  the  family  by  blood. 
Young  Morse  was  born  at  Hanover,  New  Hampshire, 
March  8,  1834.  In  his  seventeenth  year  he  entered  the 


186  MEN  AND   MYSTERIES   OF  WALL   STREET. 

treasury  office  of  the  New  York  and  New  Haven  Eailroad, 
under  the  patronage  of  Moms  Ketcham.  Here  he  was 
brought  much  in  contact  with  iron  men,  and  kept  the 
books  for  two  large  houses  concerned  in  this  trade. 
This  led  to  his  accepting  a  position  under  Balch  & 
Zimmerman,  contractors  for  building  the  Great  Western 
Eailroad  in  Canada.  Thence  he  went  to  Savannah, 
Georgia,  as  book-keeper  to  the  Marine  Bank,  and  on 
the  breaking  out  of  the  yellow-fever  in  that  city  he 
returned  to  New  York,  entering  the  banking-house  of 
Corning  &  Co.  The  crash  of  '57  carried  away  this  firm. 
Morse  now  joined  in  partnership  with  Edward  Wolf; 
and  the  new  house,  under  the  name  of  Morse  &  Wolf, 
started  a  bankers  and  broker'  office  at  60  Wall  Street. 
Speculating  largely  and  not  too  cautiously,  the  young 
brokers  failed  to  a  heavy  amount  in  '61.  Anthony  next 
went  in  with  his  brother,  L.  W.  Morse ;  and  the  two 
opened  up  a  flourishing  business  until  the  Trent  diffi- 
culty, when  their  affairs  became  seriously  entangled. 
Soon  after  A.  W.  retired  from  the  firm  and  formed  a 
copartnership  with  Isaac  Kip,  Jr.,  under  the  style  of 
Morse  &  Co.,  24  Williams  Street. 

He  at  once  took  hold  of  Fort  Wayne,  and  Cleveland 
and  Pittsburg,  buying  always  for  a  rise  and  making  hand- 
some realizations.  After  accumulating  something  like 
half  a  million  dollars,  he  purchased  the  yacht  "  Gipsey," 
and  in  the  spring  of  '63  sailed  for  Europe.  The  ocean 
voyage  in  so  small  a  craft  was  then  a  novelty.  His  re- 
ception, therefore,  was  in  the  nature  of  an  ovation.  For 
six  months  he  was  surrounded  by  the  fastest  set  of  Lon- 


THE   GREAT   OPERATORS.  187 

don  and  Paris  fashionable  yacht  and  turf  men,  —  the 
keenest  stock -gamblers  in  the  Old  World.  The  whole 
talk  of  the  Continent  was  against  the  North.  Every- 
body predicted  failure,  the  repudiation  of  greenbacks, 
and  the  general  ruin  of  the  country.  When  Morse  came 
back  to  the  city  in  December,  these  ideas  had  burnt  into 
his  brain.  Believing  that  almost  any  description  of 
security  was  better  than  the  national  currency,  he  soon 
became  one  of  the  most  conspicuous  bulls  in  the  street. 
His  first  operation  was  in  Eock  Island.  T.  C.  Durant 
was  also  in  this  pool,  but  Morse  was  the  directing  and 
creative  spirit.  During  its  manipulation  the  street  suf- 
fered by  a  sharp  "  squeeze "  in  the  money-market,  and 
the  ease  with  which  Morse  pushed  aside  this  obstacle 
gave  him  an  immense  reputation.  Although  but  thirty 
years  old,  his  office  was  daily  crowded  by  eager  throngs, 
anxious  to  get  points.  He  would  buy  five  thousand 
shares  of  Chicago  and  Northwestern.  Men  would  ask 
what  stock  was  likely  to  rise.  "  Northwestern  "  would 
be  the  answer.  Off  went  the  speculators  and  distributed 
their  orders.  Naturally  the  stock  mounted  rapidly  at 
the  boards,  and  Morse  made  ready  realizations  of  the 
shares  he  was  carrying.  An  illustration  of  his  popu- 
larity was  afforded  by  the  quickness  with  which  the 
stock  of  a  coal-mining  company  organized  by  him  was 
absorbed.  The  day  the  subscription-book  was  opened, 
outsiders  fought  with  each  other  for  the  privilege  of 
signing  their  names.  One  man  who  took  a  large  amount, 
after  having  pushed  his  way  forward  with  great  violence, 
presently  returned,  and,  walking  up  to  Mr.  Morse  in- 


188  MEN   AND    MYSTERIES   OF  WALL   STREET. 

quired,  "  I  say,  Mr.  Morse,  was  that  gold  or  coal  stock  that 
I  just  subscribed  for  ?  "  The  high  fever  of  speculation 
made  rapid  fortunes.  Morse  was  now  worth  nigli  three 
millions,  and  determined  to  do  in  Fort  Wayne  what  he 
had  previously  accomplished  in  Rock  Island.  The  stock 
started  at  about  60,  and  was  most  admirably  manipu- 
lated, until  it  finally  touched  152.  Although  the  corner 
was  but  half  completed,  Morse  was  carried  away  by  his 
success.  Upon  the  rumor  that  government  was  at  the 
point  of  selling  gold,  he  sent  a  despatch  to  Washington, 
offering  to  buy  whatever  the  Secretary  of  the  Treasury 
might  put  in  the  market.  This  was  April,  '64.  Mr. 
Chase  came  to  the  city,  sold  nine  millions  of  bullion, 
and  withheld  from  circulation  the  thirteen  or  fourteen 
millions  of  greenbacks  with  which  it  was  purchased. 
The  sale,  and  the  accompanying  lock-up  of  money  shook 
the  street,  and  Morse  &  Co.  were  the  first  to  fail !  Their 
loss2S  were  immense.  Morse  never  recovered  from  the 
blow.  His  death  occurred  in  New  York  some  four  years 
after. 

William  H.  Marston  has  had  a  remarkable  career  as 
a  leading  speculator.  He  made  his  first  money  as  a 
broker,  having  an  office  at  17  Wall  Street,  and  doing  a 
heavy  and  legitimate  commission  business.  There  is  a 
tradition  that  on  the  day  of  his  admission  to  the  Xew 
York  Stock  Exchange  he  gave  a  great  dinner  to  the 
members,  at  Delmonico's,  spending  no  one  knows  how 
much  money,  and  literally  floating  his  guests  in  cham- 
pagne. The  next  morning,  as  gossip  affirms,  he  "  broke  " 
for  half  a  million.  Although  the  story  is  sacredly  be- 


THE    GREAT    OPERATORS.  189 

lieved  upon  "  the  street,"  it  is  a  trifle  too  dramatic.  The 
lunch  was  given,  and  the  failure  took  place,  but  the  two 
events  were  months  apart. 

Subsequently,  Marstoii  paid  up  every  dollar  of  his 
indebtedness,  entering  the  market  as  an  outside  bull 
operator,  and  invariably  "  carrying  "  whatever  stock  he 
touched,  until  it  reached  a  figure  admitting  of  superb 
realizations.  In  the  summer  of  '65  he  initiated  the 
first  of  a  series  of  magnificent  operations,  by  a  transac- 
tion in  Michigan  Southern  in  conjunction  with  Henry 
Keep.  From  this  he  cleared  $  90,000.  The  fall  of  the 
same  year  he  engineered  to  a  brilliant  conclusion  the 
great  Prairie  du  Chien  corner.  In  a  previous  chapter 
we  have  described  the  main  features  of  this  celebrated 
strategic  movement,  but  we  omitted  to  say  that  the 
original  intention  of  its  promoter  was  simply  to  place 
the  stock  at  par.  "The  street"  entered  into  a  com- 
bination to  thwart  the  scheme,  and  began  to  bear  the 
market  mercilessly.  Marston,  irritated  and  indignant, 
at  once  extended  his  programme,  set  a  hundred  secret 
agents  at  work,  encouraged  the  short  interest,  and  in 
forty  days  succeeeded  in  so  manipulating  the  stock  that 
it  rose  to  250.  His  profits  could  not  have  been  less 
than  a  million  and  a  half  dollars.  One  man  who  was 
in  the  secret  made  sixty  thousand  dollars  on  three  hun- 
dred shares.  The  stock  in  hand  when  the  corner  cul-  * 
minated  was  exchanged  at  the  rate  of  100  shares  of 
Prairie  du  Chien  for  100  shares  of  Milwaukee  and  St. 
Paul  common  and  50  shares  of  the  preferred.  The  two 
roads  were  then  consolidated.  The  act  of  "  unloading  " 


190  MEN  AND   MYSTERIES   OF  WALL   STREET. 

was  therefore  quite  as  unique  and  satisfactory  as  the 
previous  operation. 

The  next  spring  Marston  formed  a  pool  and  bought 
five  millions  of  Cleveland  and  Pittsburg  $,t  83.  The 
final  realizations  were  at  from  95  to  105.  The  net 
profits  were  enormous.  In  June,  Erie  was  bulled  by 
the  same  skilful  hand.  Shares  to  the  extent  of  70,000 
were  bought  at  57  and  62,  and  afterward  sold  for  from 
73  to  77.  Daniel  Drew  was  entangled  in  this  specula- 
tion, and  is  credited  with  a  loss  of  $  1,700,000.  This 
operation  in  the  broad  gauge  shares  proved  so  flattering 
that  in  the  fall  of  '66  a  party  was  formed,  under  the 
inspiration  of  Marston,  to  purchase  130,000  shares  of 
Erie.  The  stock  was  bought  at  from  65  to  80,  and  the 
realizations  were  at  97.  On  thirty  thousand  shares  the 
originator  of  the  pool  made  $  900,000.  Later  in  the 
same  year  Marston  entered  into  a  combination  to  bull 
Northwestern  common,  buying  60,000  shares  at  47,  and 
carrying  the  stock  easily  up  to  60  and  63.  His  gains 
were  immense. 

Fortune  is  a  fickle  goddess.  The  winter  of  '67  Mars- 
ton  entered  upon  transactions  on  an  enormous  scale, 
bought  heavily  in  the  stock  of  two  or  three  railroads, 
and  handled  his  cards  deftly  for  a  stupendous  rise.  The 
luck  of  the  market,  however,  now  turned  against  him. 
He  lost  all  his  previous  accumulations  and  failed  for 
$  600,000.  Some  forty  brokers  were  swept  out  of  "  the 
street "  by  this  collapse,  which  is  still  known  as  "  the 
Marston  Panic."  The  hero  of  Prairie  du  Chien  bore  his 
losses  bravely,  and  may  be  seen  almost  every  day  on 


THE  GREAT   OPERATORS.  191 

Broad  Street,  —  one  of  the  most  wide-awake  men  in  the 
money-quarter ;  fertile  in  schemes,  and  likely  at  any 
moment  to  reappear  in  some  gigantic  combination. 

Thomas  C.  Durant  has  an  enviable  reputation  for 
financial  boldness,  quickness  of  insight,  and  Dantonian 
audacity  in  execution.  He  practised  medicine  for  a 
brief  time  in  the  South;  and,  although  he  abandoned 
his  profession  at  an  early  period,  his  friends  always 
speak  of  him  as  the  Doctor.  Like  Yanderbilt  and 
Drew,  he  acquired  his  primary  education  in  speculative 
finance  as  a  shareholder  and  manager  of  Hudson  Eiver 
boats.  Afterward  he  became  contractor  for  building  the 
Chicago  and  Eock  Island  Eailroad.  He  completed  this 
line  six  months  before  he  had  agreed  to  deliver  it  over 
to  the  directors ;  and,  with  his  usual  dash,  placed  cars 
and  locomotives  on  the  track,  and  made  a  neat  fortune 
in  working  the  road,  during  the  interim,  upon  his  own 
responsibility.  His  next  achievement  was  upon  the 
Mississippi  and  Missouri  Eailroad,  receiving  his  pay 
for  the  contract  in  land-grants  and  bonds.  Eeturning 
to  the  city,  he  soon  made  his  influence  felt  in  the  street. 
His  most  brilliant  exploit  was  the  Eock  Island  corner ; 
but  his  strategetic  combinations  in  gold,  and  some  of 
the  favorite  railway  fancies  gave  him  large  reputation. 
He  was  the  leader  of  the  Pacific  Eailroad  movement ; 
and  that  mine  of  wealth,  the  Credit  Mobilier,  owed  all 
its  glory  to  his  fine  executive  ability.  No  one  knows 
how  much  he  is  worth.  The  Doctor  himself  could  not 
tell.  He  has  given  his  wife  a  magnificent  estate  on  the 
Isle  of  Wight.  He  has  a  house  in  Brooklyn,  a  house 


192  MEN   AUD   MYSTERIES   OF  WALL   STREET. 

in  New  York,  apartments  at  the  Fifth  Avenue,  at  the 
Hoffman  House,  and  at  the  "Westminster.  He  owns  a 
steam-yacht  and  a  private  clipper.  At  present  he  keeps 
a  sharp  eye  upon  the  opportunities  of  the  Stock  Ex- 
change and  the  Gold  Eoom,  while  pushing  with  great 
energy  his  last  pet  scheme,  the  completion  of  the  Adi- 
rondack Railroad. 

Another  operator  of  note  is  Dr.  Shelton.  He  lives  at 
Newburg,  remaining  in  the  country  all  the  summer  and 
beginning  his  annual  speculations  in  October.  His 
career  covers  the  space  of  twenty  years.  He  was  carry- 
ing a  heavy  line  of  stocks  in  '62,  and  made  a  vast 
amount  in  the  subsequent  rise.  At  the  close  of  the 
war  he  was  short  75,000  shares  in  different  railroads, 
and  at  the  same  time  was  bearing  gold.  The  surren- 
der of  Lee  proved  a  very  profitable  event,  therefore. 
He  almost  invariably  sells,  and  not  seldom  gives  his 
broker  the  order  to  go  short  500  shares  on  every  stock 
called.  Recently  his  visits  to  the  Exchange  have  been 
infrequent. 

William  S.  Woodward  has  the  credit  of  experi- 
encing great  financial  vicissitudes.  He  is  bull  or  bear 
alternately,  and  operates  both  in  stocks  and  gold.  His 
speculations  in  Chicago  and  Northwest  have  generally 
been  profitable,  as  also  have  those  in  Rock  Island.  He 
led  the  rise  in  the  latter  stock  in  May,  1869,  when  the 
shares  reached  139£.  He  was  prominent  in  the  gold 
corner,  and  used  his  utmost  efforts  to  persuade  the  clique 
to  retire  when  gold  had  reached  145.  He  is  said  to  be 
now  worth  about  $  3,000,000. 


THE   GREAT   OPERATORS.  1^3 

Vanderbilt,  Drew,  Horace  F.  Clark,  William  H.  Mars- 
ton,  Woodward,  Fisk,  Jay  Gould,  Dr.  Shelton,  Dr.  Du- 
rant,  David  Dowes,  John  F.  Tracy,  Eussell  Sage  (said 
to  have  a  cash  balance  of  six  or  eight  millions  con- 
stantly on  hand),  Amasa  Stone  of  Cleveland,  John 
Steward,  James  H.  Banker,  and  Alexander  Mitchell, 
President  of  the  Chicago  and  Northwestern  and  of  the 
Milwaukee  and  St.  Paul  Eailroads,  now  constitute  the 
leading  operators  in  the  New  York  Stock  Market. 


194 


MEN  AND  MYSTERIES   OF  WALL   STKEET. 


CHAPTEE    X. 

THE   OUTSIDERS. 


x  as-  the  unknown  quantity  which  em- 
_  braces  that  portion  of  the  universe  given  to  specu- 
lation in  stocks  or  gold,  and  calling  the  brokers  a,  and 
the  recognized  heavy  operators  b,  we  have  in  a?  —  (a  -f-  V) 
an  algebraic  definition  of  what  are  known  as  outsiders. 
The  term  includes,  not  merely  the  promiscuous  and  in- 
termittent body  of  individuals  with  small  purses  and 
large  desires,  but  also  merchants,  manufacturing  capital- 
ists, bank  officers,  and  citizens  who  have  retired  upon 
their  fortunes.  Every  owner  of  governments,  from  the 
sixteen  hundred  and  odd  National  banks,  and  the  multi- 
tudinous Savings-banks  of  the  United  States,  down  to 
the  possessor  of  a  single  fifty-dollar  bond,  in  some 
way  or  other,  at  some  time  or  other,  comes  in  contact 
with  the  market,  and  affects,  or  is  affected  by,  its  prices. 
All  along  the  lines  of  our  railroads  are  men  who  hold 
shares  or  bonds.  In  Ohio  it  is  estimated  that  more  than 
half  the  capital  stock  is  in  the  hands  of  local  holders, 
although  many  of  the  roads  are  of  the  speculative  class. 
Illinois  Central  is  extensively  distributed  among  the 
small  capitalists  of  the  State  through  which  it  passes. 
The  people  of  Pennsylvania  and  New  Jersey  are  large 
owners  of  stock,  daily  quoted  on  the  Exchange  ;  and, 


THE    OUTSIDERS.  195 

although  very  much  of  the  one  billion  dollars  which  are 
said  to  be  annually  saved  for  investment  in  the  United 
States  disappears  either  in  private  channels,  or  is  locked 
up  in  close  corporations  and  securities,  circulating  in 
circumscribed  limits,  yet  in  no  inconsiderable  degree 
these  representations  of  value  are  employed  to  feed  the 
fever  of  speculation.  Stock-brokers  are  always  ready 
to  take  city  bonds  or  manufacturing  shares  of  good 
character,  as  a  basis  of  margins.  The  outsider  may 
hesitate  to  buy  out  and  out  the  favorite  shares  of  the 
Board,  but  he  is  only  too  eager  to  have  his  surplus  in 
the  more  stable  classes  of  securities,  and  to  use  them  as 
collaterals  for  obtaining  money  to  operate  with  in  the 
street.  The  wide  variations  in  the  prices  of  the  market 
have,  therefore,  had  a  double  effect.  They  have  penetrated 
the  public  with  a  desire  for  investment  in  stocks  not 
quoted  on  share  lists,  and  stimulated  it  into  constant 
ventures  of  purchase  or  sale  in  the  very  arena  which  it 
otherwise  shuns. 

Some  idea  is  furnished  of  the  area  of  outside  specula- 
tion by  the  testimony  of.  telegraph  operators.  The  ex- 
act average  of  daily  orders  from  different  sections,  which 
reach  the  New  York  Stock  Exchange  by  this  channel, 
including  not  only  the  offices  of  the  Western  Union  and 
the  Bankers  and  Brokers'  Telegraph  Company,  but  also 
the  Atlantic  and  Pacific  and  the  Franklin,  varies  from 
2300  in  lively  periods  to  850  in  dull  times.  The  Na- 
tional Stock  Board,  in  addition,  receive  about  300  a 
week.  By  the  English  cables  some  150  messages  come 
to  New  York  brokers  every  day,  and  half  that  number 


196  MEN  AND   MYSTERIES   OF  WALL   STEEET. 

arrive  via  the  French  wires.  Not  less  than  $  1,200,000 
is  paid  yearly  by  members  of  the  Stock  and  Gold  Ex- 
changes for  oceanic  despatches !  Omitting  the  foreign 
business  in  the  present  view,  and  confining  our  atten- 
tion solely  to  domestic  localities,  we  find  that  Philadel- 
phia exceeds  all  other  cities  in  its  orders.  Boston  and 
Baltimore  follow  next  Hartford,  Providence,  St.  Louis, 
San  Francisco,  and  Chicago  use  the  wires  very  freely. 
But  the  most  significant  illustration  of  the  deep-seated  and 
widely  ramified  tendency  toward  speculation  is  found  in 
the  occasional  commissions  which  trickle  in  from  strange 
and  wayside  places.  Villages  whose  names  are  scarcely 
known  beyond  the  boundary  of  their  counties  have  their 
rustic  Fisks  and  Vanderbilts.  Sparks  of  electricity  fly 
up  from  the  marshes  of  the  Mississippi  Valley,  from  the 
golden  desolation  of  Nevada,  from  factory  hamlets  in 
Connecticut,  from  the  pastoral  seclusions  of  Vermont ; 
bearing  emergent  orders  to  sell  Hudson  short,  to  buy 
500  Fort  "Wayne,  to  take  a  put  on  Eock  Island,  or  a  call 
on  Tennessee  6s. 

In  the  flush  days,  between  '63  and  '67,  the  sum  total 
of  these  outside  speculators  reached  enormous  figures. 
New  York  City,  and  the  population  included  in  a  radius 
of  a  hundred  miles  of  that  centre,  furnished  its  thou- 
sands. Women  pawned  their  jewels  for  margins. 
Clergymen  staked  their  salaries.  One  man  sent  his 
horse  to  his  broker,  and  realized  in  the  end  $  300,000 
from  this  small  beginning.  Brokers  cleared  from  three 
hundred  to  three  thousand  dollars  a  week  in  commis- 
sions alone.  The  unlucky  never  tell  their  misfortunes. 


THE   OUTSIDERS.  197 

An  author  in  two  months  lost  the  profits  of  three  books. 
A  bank  clerk,  in  one  of  that  chain  of  towns  between 
Albany  and  the  city,  on  the  Hudson  railway,  made 
thirty  thousand  dollars,  in  successive  strokes.  Then  he 
offered  himself  to  a  fair  young  girl,  and  put  the  whole 
of  his  gains  into  the  street,  promising  his  affianced  the 
rarest  of  bridal  gifts.  Three  days  after  he  received  a 
despatch  with  the  warning  word,  "  Ten  per  cent  more 
margin."  His  resources  were  exhausted.  He  hurried 
to  New  York,  begged,  implored,  labored  with  his  brokers 
for  hours,  to  induce  them  to  have  pity  on  his  situation. 
But  the  stock  was  plunging  downward,  and  they  were 
"  carrying  "  more  than  their  capital  would  allow.  They 
gave  one  day's  grace,  and  then  sold  their  customer  out. 
He  returned  to  his  home  a  broken  man,  with  all  his  old 
shrewdness  and  self-confidence  gone  forever.  There  are 
hundreds  upon  hundreds  of  such  human  wrecks  scattered 
through  towns  and  cities,  some  shut  up  in  asylums,  others 
living  out  aimless  lives,  —  mental  paralytics,  dazed  or 
crazed  by  the  swift  shock  of  ruin.  Those  who  escaped  sim- 
ply with  the  annihilation  of  their  wealth  or  competence 
might  be  deemed  happy,  compared  with  others  whose 
ventures  left  heavy  debts  of  honor,  which  absorbed  the 
surplus  of  future  years.  Men  in  positions  of  trust,  who 
in  some  ill-starred  moment  had  taken  the  funds  of  which 
they  were  sworn  guardians,  in  order  to  cover  unexpected 
losses,  were  frequently  at  the  mercy  of  brokers  as  un- 
scrupulous as  cruel.  The  fate  of  Jenkins,  the  cashier  of 
the  Phoenix  Bank,  who  defaulted  for  $  300,000,  the  large 
proportion  of  which  had  been  paid  over  for  hush  money, 


198  MEN   AND   MYSTEEIES   OF  WALL   STREET. 

is  but  a  single  instance  out  of  scores  of  cases,  very  few 
of  which  have  come  to  public  notice.     It  was  asserted 
in  a  New  York  paper  of  February  2,  1869,  that  Mr. 
Webster,  then   Assessor  of  the  Wall   Street   Internal 
Revenue  district,  had  discovered  that  two  millions  were 
employed  in  stock  transactions  by  metropolitan  church 
trustees,  out  of  the  ecclesiastical  revenues  under  their 
control.     Church  edifices  were  mortgaged  in  order  to 
preserve  margins.     Prominent  pastors  were  said  to  be 
heavy  speculators,  and  their  frequent  presence  in  brok- 
ers'  offices   was   a  matter  of   scandal.       An  eminent 
Episcopalian  divine  is  reputed  to  have  made  over  fifty . 
thousand  dollars.     Where  the  shepherd  wanders  wool- 
hunting,  the  sheep  are  apt  to  go  astray.     Probably  if  the 
facts  regarding  the  use  of  fiduciary  securities  as  a  means 
of  speculation  were  fully  known,  it  would  be  a  revela- 
tion as  fatal  to  credit  as  the  revulsion  of  '57.     Veteran 
brokers,  prone  to  cautiousness  in  speech,  declare  that 
breaches  of  trust  are  far  more  common   in  wardships, 
and  those  other  guardian  offices  which  are  a  part  of 
purely  private  life,  than  in  the  more  public  departments 
of  commerce.     The  trustee  perceives  an  opportunity  for 
rich  profit.     His  first  step  is  the  one  that  does  not  cost. 
He  wins  and  wins,  always  employing  his  private  capital, 
and  staking  each  new  accumulation  for  a  larger  gain. 
Presently  the   tide  changes.      He   touches   the   sacred 
legacy.     Another  turn  of  the  die  restores  all  that  was 
taken,  and  the  secret  rests  in  his  own  bosom.     If  he  be 
still  unfortunate,  it  is  not  difficult  to  entangle  his  wards 
in  the  net,  and  persuade  them  that  it  was  their  folly 


THE   OUTSIDERS.  199 

which  has  wrought  destruction.  Even  at  the  worst,  a 
frank  confession,  with  the  honest  remorse  that  the  hard- 
est natures  must  at  such  a  crisis  feel,  will  coerce  the 
victims  into  the  forgiveness  which  robs  the  law  of  a 
criminal. 

The  story  of  financial  "  irregularities,"  caused  by  un- 
successful stock  speculations,  is  one  of  the  sombrest 
chapters  in  our  recent  history.  The  moral  censor  who 
should  undertake  the  thankless  task  of  gathering  the 
hard,  painful,  romantic  facts  of  bank,  railroad,  insurance- 
company,  and  mercantile  defaulters,  and  weave  them 
together  in  a  volume,  could  have  at  his  command  ma- 
terial that  Juvenal  might  well  have  envied.  Until 
society  gives  the  lie  to  that  obsolete  truism  which  de- 
clares poverty  to  be  no  disgrace,  such  labor  would  be 
only  a  fresh  injustice.  To  penetrate  the  walls  of  state 
prisons,  and  the  veiled  secrets  of  the  cemetery,  in  order 
to  unearth  the  misdeeds  of  forgers,  the  malefeasances  of 
bank  presidents,  at  whose  funerals  clergymen  by  the 
dozen  lent  the  testimony  of  their  presence,  and  the  un- 
suspecting frankincense  of  impassioned  eulogy,  —  of  men 
who  committed  the  suicide  of  the  body  rather  than 
endure  the  penalty  of  social  suicide  which  their  foolish- 
ness had  wrought,  —  of  individuals  dead,  or  dying  under 
feigned  names  in  foreign  lands  with  the  misery  of  a 
blighted  past  haunting  them  to  the  last  breath,  —  this  is 
to  add  crime  to  crime  as  long  as  the  public  insists  upon 
the  worship  of  success,  and  measures  its  honors  by 
length  of  purse.  The  glory  of  Wall  Street  lies  in  its 
magnificent  opportunities  for  satisfying  in  a  few  months 


200  MEN   AND   MYSTERIES   OF  WALL   STREET. 

the  demands  of  civilization.  It  is  the  greatest  money- 
making  and  money-losing  spot  on  the  globe.  Pio  Nino 
never  asks  how  his  Peter's  pence  are  gathered  together, 
nor  do  brokers  feel  bound  to  enter  into  all  the  interior 
history  of  the  margins  which  come  to  their  hands. 
Their  office  is  to  make  ten  dollars  out  of  one.  It  is  a 
mission  quite  as  distinct  as  that  of  the  reformers,  and  a 
thousand-fold  more  appreciated.  The  fallacies  of  a  few 
individuals  who  are  weak  enough  to  put  themselves 
under  the  ban  of  law  and  society  without  enough  re- 
served strength  to  ultimately  break  through  the  meshes, 
ought  not  to  abate  our  admiration  of  that  gigantic  specu- 
lative machinery  which  most  exactly  answers  the  re- 
quirements of  the  age. 

Most  of  the  outsiders  who  have  lost  money  through 
the  Stock  Exchange  have  themselves  to  thank  for  it. 
Some  are  careless  in  their  choice  of  brokers,  and  where 
there  are  three  or  four  hundred  houses  of  thorough  in- 
tegrity which  they  can  employ,  they  evince  preter- 
natural alertness  in  selecting  the  genuine  vampires  of 
the  street.  Others  put  all  their  savings  into  one  throw, 
and  in  the  natural  oscillations  of  stock  their  margins 
need  strengthening  just  at  the  moment  when  they  can- 
not lay  their  hands  on  additional  funds.  Many  are 
eager  to  appear  learned  in  broker's  slang,  and  so  give 
orders  the  reverse  of  what  they  mean.  Not  a  few  besiege 
their  friends  for  points,  and  when  they  have  elicited  some 
vague  reply,  such  as  "  Fort  "Wayne  is  a  good  stock  to  hold," 
"  Erie  must  fall  under  the  pressure  of  the  new  issues," 
they  plunge  in,  are  entangled  in  some  unexpected  clique 


THE   OUTSIDERS.  201 

movement,  and  come  forth  minus  their  shekels  and  full 
of  wrath  against  the  unoffending  individual  who  had 
unwittingly  given  the  hint  which  betrayed  them.  Oc- 
casionally these  victims  of  their  own  imbecility  seek 
redress  in  the  courts.  A  late  lawsuit,  in  which  Colonel 
Hawkins  figured  as  plaintiff,  illustrates  a  phase  of  this 
subject,  although  in  the  particular  instance  to  be  cited 
it  was  not  at  all  clear  that  the  defendant  did  not  pass 
the  boundary  of  prudence.  During  the  session  of  the 
great  Sanitary  Fair  of -New  York,  George  Bliss,  Jr.  and 
Colonel  Hawkins  were  active  members  of  the  sub-com- 
mittee of  arms  and  trophies.  The  latter  was  somewhat 
."  in  stocks,"  and  alleged  at  the  trial  that  Mr.  Bliss  called 
his  attention  to  the  Wyoming  Valley  Coal  Company  as 
affording  peculiar  opportunities  for  investment,  especially 
intimating  that  he  was  in  with  the  ring  and  knew  the 
stock  would  rise.  Mr.  Bliss,  it  should  be  noted,  gave 
testimony  to  the  contrary,  and  insisted  that,  so  far  as 
he  eulogized  the  stock,  he  was  justified,  inasmuch  as 
Leonard  W.  Jerome,  then  in  the  flower  of  his  career,  had 
purchased  a  call  for  a  large  amount,  and  this  single  fact 
ought,  as  speculation  goes,  to  have  enhanced  the  market 
value  of  the  property. 

Whether  the  victim  of  self-deception  or  of  over-con- 
fidence in  his  Sanitary  Fair  colleague,  the  Colonel  de- 
cided to  make  a  venture  in  Wyoming  Valley,  buying 
1,000  shares  and  paying  $  52,500.  This  was  in  April, 
1864.  All  through  the  summer  he  waited  patiently,  but 
the  stock  either  kept  steadily  at  the  sale  figure  or  vi- 
brated in  slight  degrees  downward.  Early  in  the  fall  it 


202  MEN  AND   MYSTERIES    OF  WALL   STREET. 

dropped  sharply  down,  and  by  November  the  speculation 
had  so  untoward  an  aspect  that  Hawkins  decided  to  sell 
five  hundred  shares.     In  March  of  the  next  year  he 
threw  the  remaining  instalment  into  the  market. 
The  profit  and  loss  account  run  as  follows  :  — 

To  1,000  shares  Wyoming  Valley  Coal  @  $  52|       .     $  52,500.00 
By  500  shares       $  25.75        $  12,875 
"    400      "       "      27.50  11,000 

"    100      "      "     27.75  2,775   .        .        .    26,650.00 

$  25,850.00 
In  addition,  the  Colonel's  brokers  brought  in  a 

bill  for  interest  and  commissions  of       ...          2,926.61 
Giving  a  net  loss  of $28,776.61 

These  figures  need  no  comment.  Yet  in  one  respect 
the  operation  conformed  to  one  of  the  most  important 
laws  of  speculation.  The  stock  was  bought  and  carried 
for  from  six  to  eleven  months.  Had  there  been  as  much 
wisdom  in  selecting  as  there  was  tenacity  in  holding,  the 
balance-sheet  would  probably  have  been  very  different. 
Either  by  selling  when  the  market  is  unduly  high,  or 
buying  when  it  is  unquestionably  low,  and  then  carrying 
the  venture  for  a  year  if  necessary,  an  outsider  has  at 
all  events  equal  chances  of  gain  or  loss.  This  balancing 
of  risks  is  in  itself  an  advantage  which  veteran  opera- 
tors can  best  appreciate.  The  difficulty  with  the  "Wyo- 
ming Coal  was  that  it  was  emphatically  a  "  fancy  "  stock. 
There  were  twenty  good  railroad  properties  on  the  share 
list  which,  with  fifty  thousand  dollars  of  capital,  would 
have  insured  a  safe  profit  either  in  a  "  long  "  or  "  short " 
•operation. 


THE   OUTSIDERS.  203 

It  is  partly  for  want  of  courage  to  endure  an  occa- 
sional "  break "  in  stocks,  and  partly  from  lack  of  com- 
mon-sense in  the  choice  of  time  and  of  securities,  that 
those  outsiders  who  are  free  from  the  other  weakness  to 
which  we  have  alluded  so  frequently  meet  with  misfor- 
tune. Brokers  are  fond  of  telling  their  customers,  jo- 
cosely, that  the  true  way  to  speculate  is  to  buy  when 
stocks  are  low  and  sell  when  they  are  high.  As  a  matter 
of  fact,  the  advice  is  not  more  sound  than  feasible,  and 
the  few  who  act  upon  it  invariably  become  rich.  There 
are  scores  on  scores  of  capitalists  in  New  York  City, 
Providence,  Hartford,  Philadelphia,  and  other  places, 
who  have  always  adopted  this  policy.  They  watch  the 
market,  study  the  earnings  of  companies,  look  into  the 
character  and  bent  of  mind  of  directors,  and  when 
certain  stocks  fall  to  a  reasonable  figure  they  buy,  gen- 
erally upon  wide  margins.  Any  yearly  chart  of  prices 
will  show  the  safety  of  such  procedure  and  the  fre- 
quency of  opportunities  for  acting  upon  it.  The  follow- 
ing chapter  will  be  found  full  of  illustrations  touching 
upon  this  subject.  The  great  operators  do  not  care  to 
employ  this  method,  as  they  find  quicker  profits  in  cor- 
ners ;  the  brokers  cannot,  as  their  capital  is  limited  and 
they  are  compelled  to  turn  it  constantly,  —  their  separate 
speculations  seldom  lasting  more  than  a  month  or  two. 
Meanwhile,  the  great  proportion  of  outsiders,  new  in 
the  field,  impulsive,  easily  influenced,  are  captivated 
by  some  active  stock,  buy  it  when  the  market  is  boom- 
ing, and  sell  upon  the  first  decline.  Where  there  is  not 
timidity,  there  is  very  apt  to  be  obstinacy.  It  is  one  of 


204  MEN  AND   MYSTEEIES   OF  WALL   STEEET. 

the  most  harassing  functions  of  brokerage  to  convince 
a  customer  that  the.  fact  a  security  is  quoted  at  150  is 
an  argument  in  favor  of  letting  it  alone.  One  class  has 
implicit  faith  that  it  will  rise  to  200,  and  at  175  refuses 
to  sell.  Of  course  a  reaction  sets  in.  Possibly  a  defal- 
cation is  announced,  or  the  capital  stock  has  been  wa- 
tered into  twice  its  former  bulk.  The  tumble  downward 
commences,  now  140,  next  120,  110,  90,  85,  70.  The 
fresher  the  men  the  greater  the  bulldog  spirit,  until 
when  the  shares  reach  60,  a  panic  seizes  them.*  They 
sell  peremptorily,  only  to  find,  a  week  or  two  after,  that 
the  stock  has  recovered  to  85.  Nothing  could  be  more 
absurd  than  this,  and  nothing  more  habitual.  To  buy  at 
the  crest  wave  of  extreme  advance  and  to  sell  at  the 
lowest  ebb  of  the  tide,  are  what  brokers  assure  us  to  be 
the  judicious  customs  of  ninety  out  of  a  hundred  of  the 
people  who  bewail  their  inexplicable  misadventures  in 
stocks ! 

*  We  trust  the  reader  will  not  infer  that  because  a  too  quick  aban- 
donment of  a  speculation  is  unwise,  it  is  therefore  necessary  to  cling  with 
undue  pertinacity  to  property  which  has  lost  value.  Every  broker  has 
his  anecdote  of  customers  who  have  been  caught  by  "  traps  "  (argot  for 
worthless  "  fancy  "  shares),  and  have  kept  them  for  years  in  hope  of  a 
change  in  the  market.  The  most  remarkable  instance,  however,  of  in- 
fatuated obstinacy  in  this  regard  is  to  be  found  outside  of  stocks.  In 
1825  there  was  a  great  speculative  mania  in  cotton,  followed  by  a  short 
decline.  A  Liverpool  merchant  that  year  had  sold  most  of  his  con- 
signment at  the  top  prices  of  the  time,  but  still  had  on  hand  some 
2,000  pounds,  which  had  cost  about  43  cents  a  pound.  When  rates 
lowered,  he  stored  the  bales  away,  determined  not  to  sell  until  the 
market  recovered.  The  lot  was  finally  sold  in  1849.  By  that  date  it 
had  cost  in  storage,  interest,  etc.,  $  2.60J  a  pound,  or  a  total  of  $  5,210. 
It  brought  15 \  cents,  giving  a  net  loss  of  $  4,905! 


THE   OUTSIDERS.  205 

"  Short "  transactions  are  apt  to  be  a  stumbling-block 
to  beginners.  The  first  speculations  of  outsiders  are  al- 
ways for  a  rise.  To  sell  what  you  have  not  got,  and  yet 
make  money  by  it,  is  a  species  of  metaphysics  that  comes 
only  by  education.  One  reason  for  its  unpopularity  is 
that  the  new  men  are  thorough  bulls.  They  have  money. 
•  Their  feelings  are  buoyant.  The  stock  market  is  couleur 
de  rose.  It  is  the  melting  down  of  margins  and  a  few 
sharp  losses  which  develop  the  bear. 

Among  city  clerks  and  men  about  town  with  small 
means,  a  common  habit  is  to  give  a  broker  acquaintance 
an  order  to  buy  on  a  ten  per  cent  margin,  with  the  provis- 
ion that  if  the  price  drops  down  to  the  point  covered  by 
the  advance,  it  shall  be  sold  without  recourse ;  if  it  rises 
five  per  cent,  the  broker  is  to  realize.  Not  unfrequently 
five  or  ten  persons  club  together,  putting  in  $  200  each. 
This  allows  of  a  purchase  of  $  1,000  in  stocks,  which,  if 
the  quotation  be  50,  would  give  two  hundred  shares.  At 
55  they  would  double  their  money.  Occasionally  a  com- 
plaisant operator  will  agree  to  take  two  per  cent  mar- 
gin, buying  or  selling  short  in  the  morning,  and  revers- 
ing the  course  in  the  afternoon.  Ten  per  cent  has  been 
made  by  this  process  in  a  day,  a  thousand  dollars  ad- 
mitting of  a  transaction  in  500  shares,  giving  five  thou- 
sand dollars  clear  in  the  fall  or  rise  between  100  and 
110.  Generally,  however,  one,  two,  or  three  per  cent  is 
all  that  can  be  obtained.  Even  a  fluctuation  of  f  would 
thus  make  more  than  half  the  money  risked  in  margin. 

A  very  considerable  share  of  commissions  comes  to 
New  York  indirectly.  Banks  all  over  the  country  form 


206  MEN   AND   MYSTEKIES   OF  WALL   STREET. 

little  centres  around  which  local  speculation  collects. 
The  advice  of  cashiers  or  presidents  is  taken.  Trades- 
men with  a  surplus  balance  of  five  or  twelve  hundred 
dollars  look  into  the  financial  columns  of  the  city  daily 
or  weekly,  compare  rumors,  make  partial  decisions,  and 
then  go  to  the  bank  and  ask  if  Milwaukee  and  St.  Paul 
would  n't  be  safe  now ;  or  whether  New  Jersey  Central 
is  not  likely  to  react.  After  due  hesitation  they  finally 
conclude  to  try  Cleveland  and  Pittsburg,  or  possibly 
one  of  the  other  stocks  just  mentioned.  The  cashier 
telegraphs  or  writes  to  his  usual  broker,  transmits  the 
money,  and  in  a  day  or  more  receives  the  stock.  His 
action  is  unofficial,  and  very  commonly  he  derives  no 
profit  from  the  service.  The  people  who  purchase  in 
this  manner  always  buy  out  and  out,  although  with  the 
purpose  of  realizing  in  an  early  future.  Even  heavy 
capitalists  employ  the  same  agency,  operating  both  on 
margins  and  by  solid  purchases  or  sales. 


MOBILITY   OF   STOCK.  207 

CHAPTER    XI. 

MOBILITY  OF   STOCK. 

AT  various  times  ingenious  accountants  have  sought 
to  devise  a  system  of  weights  and  measures  for 
the  Stock  Market.  Sometimes  the  basis  of  these  cal- 
culations has  been  the  average  rental  rate  of  real  estate ; 
at  others,  the  annual  worth  of  money  lent  freely  upon  un- 
impeachable security.  The  method  is  not  difficult  in  its 
arithmetic,  and  has  doubtless  a  certain  use,  as  illustrating 
the  difference  between  the  selling  rate  of  stocks  and 
their  theoretical  value.  Thus,  where  money  brings  easily 
seven  per  cent  a  year,  it  is  clear  that  a  stock  with  guar- 
anteed interest  of  seven  per  cent  ought  to  have  par 
value,  provided  the  company  which  it  represents  is  man- 
aged with  such  care  as  to  insure  the  property  from  future 
injury  in  its  earning  power.  In  other  words,  stock  cost- 
ing one  hundred  dollars,  and  paying  seven  dollars  yearly 
in  dividends,  if  the  precedent  conditions  were  complied 
with,  ought  to  be  exactly  as  safe  and  profitable  an  in- 
vestment as  the  same  amount  of  money  out  at  loan. 
Now,  if  the  same  stock  should  permanently  pay  eight 
per  cent,  its  true  value  in  the  market  would  be  the 
equivalent  of  that  sum,  which  at  seven  per  cent  would 
give  eight  dollars  in  interest.  Were  a  capitalist  to  buy 
the  stock  at  114|,  his  annual  dividend  would  be  precisely 


208  MEN  AND  MYSTERIES   OF  WALL   STEEET. 

what  the  same  money  would  be  worth  at  .07  per  year. 
Thus  $  114f  x  .07  =  $  8.  What  is  true  for  eight  per 
cent  will  of  course  hold  in  due  proportion  either  for  six, 
ten,  or  twenty  per  cent  dividends.  On  this  reasoning 
the  subjoined  table  is  based :  — 


Par  of  Stock. 

Guarantee  Interest. 

True  Value. 

100    .  V.'  ! 

.07      . 

100. 

100          .    ':<    »> 

.      .08 

.          .      114? 

100      .         '. 

.          .          .09      . 

1284 

100 

.      .10 

.     142f 

100     . 

.        .        .15    . 

214f 

100          . 

.        .     .20        .        . 

.    285f 

100     . 

.        .        .25    . 

3571 

100 

*%»':             •         -06 

.        .      854 

100    . 

.05    . 

.      f.          71f 

100        ,    '  .„ 

.     .04 

.        .      57} 

100     . 

.01     . 

144 

Any  school-boy  can  see  that  seven  per  cent  upon 
$357if-  would  give  the  same  annual  sum  as  that  of  a 
twenty-five  per  cent  dividend  upon  a  $  100  stock.  As 
long,  therefore,  as  it  is  certain  that  the  high  dividend 
will  be  permanent,  this  stock  at  any  point  below  $  357 
is  a  cheap  purchase. 

With  gold  at  120,  the  coupon  of  a  $  100  government 
bond  is  worth  $  7.20.  The  sale  value  of  the  bond  itself 
by  the  above  table  should  have  equalled,  at  that  rate  of 
interest,  102^.*  While,  in  fact,  5-20s,  when  gold  is  at 

*  In  order  to  prevent  any  misapprehension,  we  may  as  well  repeat 
what  has  already  been  said  in  a  different  place,  that  all  fractional  prices 
of  stocks  are  in  eighths.  When,  therefore,  fractions  in  sevenths  occur 
in  this  chapter,  it  should  be  understood  that  reference  is  made  to  the 
table  above. 


MOBILITY   OF   STOCK.  209 

the  figure  cited,  are  marketed  at  115.  Fort  Wayne 
stock  is  guaranteed  at  seven  per  cent  by  the  Pennsyl- 
vania Central,  the  wealthiest  railway  corporation  in  the 
State  whose  name  it  bears.  The  shares  ought  to  sell, 
per  table,  for  100.  They  could  be  bought  in  December, 
1869,  at  85.  Why  will  men  give  twelve  per  cent  above 
the  legitimate  value  of  one  security,  and  hesitate  at  the 
apparently  great  profit  of  twelve  per  cent  discount  in 
another  ? 

Seventy  years  ago  a  chart  classifying  the  great  British 
funds,  according  to  ratios  similar  to  the  tables  just  pre- 
sented, was  published  in  London,  and  the  subsequent 
fluctuations  of  the  English  stock  market  must  have 
enabled  all  who  acted  upon  this  guide  to  make  very- 
considerable  additions  to  their  wealth.  How  many  men, 
however,  would  have  the  courage  to  employ  such  a  sys- 
tem, even  if  convinced  that  the  groundwork  were  thor- 
oughly sound?  Let  any  reader,  fortunate  in  having 
money  to  invest,  look  into  his  own  heart  for  an  answer. 
He  will  find  there  suspicion,  over-confidence,  timidity, 
vacillation,  —  each  and  every  element  which  has  made 
the  prices  of  all  financial  centres  through  early  and 
latter  days  fluctuating,  unstable,  hazardous.  Examine 
any  yearly  record  of  sales  in  the  N"ew  York  Stock  Mar- 
ket, and  then  go  back  to  the  emotions  of  January  and 
compare  them  with  the  fact  of  December.  You  will  find 
confidence  where  the  registry  shows  there  should  have 
been  distrust,  hesitation  which  ought  to  have  been 
daring,  doubts  where  faith  would  have  been  wealth. 
This  weakness  of  humanity  is  the  life  of  speculation. 


210  MEN   AND   MYSTERIES   OF  WALL   STREET. 

This  uncertainty  of  the  future,  this  susceptibility  to 
momentary  influences,  affecting  the  coollest  and  shrewd- 
est heads,  gives  even  to  irrefragable  values  the  quality 
of  quicksilver. 

Government  bonds,  during  the  last  year  or  two,  have 
maintained  great  evenness  of  rates,  yet  twenty-four  sales 
and  purchases  either  in  '68  or  '69  would  have  given  fifty 
per  cent  profit,  apart  from  the  coupons,  and  in  the  dark 
days  of  the  war  forty  gold  dollars  would  have  secured  a 
hundred-dollar  bond.  Look  at  the  Panama  Railway 
stock  when  paying,  as  now,  twenty-four  per  cent  divi- 
dends, but  before  the  Pacific  Eailway  had  materially 
diminished  its  earnings.  In  two  years,  closing  with  De- 
cember, '68,  the  fluctuations  ranged  in  figures  like  the 
following,  —  260,  254,  270,  261,  300,  311,  295,  300. 
Illinois  Central  is  not  a  speculative  stock.  It  is  held 
at  home,  in  England,  in  Germany,  for  its  annual  fruitage ; 
yet  the  tidal  movements  of  the  Exchange  were  for  the 
same  period,  117|,  111,  129, 122, 135, 147, 137, 159, 144. 
The  Delaware  and  Hudson  Canal  is  a  substantial  prop- 
erty, managed  in  the  interests  of  its  owners.  During  the 
past  three  years  its  shares  exhibit  an  ebb  and  flow  of 
133, 150, 145, 155, 152,  160,  139,  163,  119£,  131.  Such 
examples  are  only  too  numerous.  They  are  part  of  the 
scrutable  and  inscrutable  features  of  every  money  mart. 

The  primary  cause  of  mobility  of  stock  is,  and  must 
always  be,  excess  or  want  of  confidence.  The  artificial 
unquestionably  mingles  with  the  natural  class  of  in- 
fluences, and  there  are  not  a  few  operators  whose  style 
of  navigation  is  to  beat  up  against  the  wind.  But  there 


MOBILITY   OF   STOCK.  211 

is  not  a  speculator  in  or  out  of  Wall  Street  who  is  not 
subject  to  subtle  undercurrents  blinding  the  judgment, 
coloring  all  views,  depressing  or  exhilarating,  making 
him  bull  or  bear.  The  world  does  not  contain  a  more 
thorough  materialist  than  the  genuine  stock-broker. 
And  yet  if  there  be  spiritual  forces  anywhere  at  play, 
it  is  around  the  temples  of  the  money-changers.  Sombre 
spirits  foreboding  war  in  peace,  and  defeat  in  battle, 
failure  of  crops,  a  drooping  trade,  a  dying  commerce, 
usury  in  the  money-market,  glimmerings  of  repudiation 
round  the  whole  sky,  dishonesty  in  directions,  pecula- 
tion, defalcations,  all  the  evils  of  humanity  which  in 
reaction  destroy  security  and  strike  down  the  prices  of 
stock.  Again,  bright  spirits  bringing  the  hope  of  sunny 
harvests,  of  peace  among  the  nations,  or  victory  beneath 
war's  whirlwind,  of  abounding  activity  in  manufacture 
and  trade,  of  flush  money  days,  and  fever  for  investment 
and  speculation.  Spirits  who  haunt  the  street  for  an 
hour,  and  others  that  abide  for  months, — guardian  spirits 
who  make  every  venture  successful,  and  malignant 
spirits  like  At6  or  Nemesis  driving  their  victims  from 
failure  to  failure  till  the  end  is  reached.  We  have  yet 
to  hear  of  a  genuine  stock-jobber  who  does  not  believe 
in  chance  even  against  his  will  The  atmosphere  is  so 
fickle,  there  are  such  swarms  of  rumors,  the  whole 
market  is  so  subject  to  evanescent  unreasonable  tran- 
sitions that  a  man  who  buys  or  sells,  unless  on  accidental 
certainties,  uses  such  prevision  as  is  granted  him,  and 
trusts  to  luck  for  the  sequel. 

The  tendencies  of  the  times  are  toward  instability. 


212  MEN   AND   MYSTERIES   OF  WALL   STREET. 

An  age  of  steam  and  telegraph  is  necessarily  disquiet, 
impatient,  eager  to  gain  opulence  by  express-trains.  En- 
gineers tell  us  that  after  a  certain  point  each  increase  of 
speed  is  at  double  cost  in  wear  and  tear.  It  is  so  in 
money-getting.  The  immense  friction  rubs  away  a  vast 
deal  of  fribbling  honesty,  small  prejudices,  super-niceties 
of  conscience.  Hard  pan  is  soon  reached,  and  both  old 
world  and  new  are  full  of  hard-pan  capitalists.  Before 
1825  people  sought  competence.  Up  to  1837  the  end 
was  wealth.  Since  then  our  rich  men  are  only  content 
with  being  king  merchants  and  king  speculators,  —  to 
have  power  to  rule,  to  be  invincible.  If  Vanderbilt 
loses  five  dollars  in  early  evening  at  the  Manhattan,  he 
will  play  till  midnight  in  order  to  win  it  back.  That  is 
the  character  of  the  man  in  a  nutshell.  And  finance  is 
full  either  of  men  of  that  stamp  who  simply  want  sur- 
plusage of  power,  or  of  others  who  are  eager  to  attain 
to  the  plane  already  arrived  at  by  the  others.  As  a  con- 
sequence, we  have  corruption  in  railway  management, 
finesse  in  telegraph  and  steamship  lines,  stock  watering 
by  the  hundred  millions,  legislative  jobbery,  "passing" 
of  dividends,  —  every  artifice  of  capital,  working  under 
high  pressure.  All  the  antiquated  influences  affecting 
securities,  —  anticipation  of  political  complications,  fears 
of  agricultural,  manufacturing,  or  mercantile  depression, 
foreboding  of  panics,  and  the  like,  are  now  multiplied 
indefinitely  by  fresh  expedients  —  purely  artificial  —  but 
far  more  fatal  to  the  equilibrium  of  values. 

Uncertainty,  however,  is  not  a  disadvantage  in  specu- 
lation.    The  class  of  bonds  or  stocks  about  which  an 


MOBILITY   OF   STOCK.  213 

investor  can  safely  reason,  and  cipher  out  profits  —  which 
might  be  taken  as  a  basis  for  charts  like  that  of  For- 
tune's of  London  —  are  not  popular  with  outsiders  or 
operators.  The  street  rallies  round  the  stocks  which  are 
most  under  suspicion ;  the  draggled  skirts  of  Erie  have 
always  had  a  fascination.  When  Western  Union  Tele- 
graph stock  was  on  the  edge  of  its  present  low  estate,  it 
was  the  pet  of  the  street.  Enter  the  Stock  Exchange  at 
any  morning  call,  and,  apart  from  mining  shares,  one 
might  shrewdly  select  the  class  of  security  which  will 
justify  investment  by  the  rapidity  with  which  the  Vice- 
President  slurs  it  over.  Northwestern,  Fort  Wayne, 
Lake  Shore,  Michigan  Southern,  Pacific  Mail,  the  Ex- 
press stocks,  the  Vanderbilt  stocks,  Atlantic  Mail,  Ten- 
nessee Sixes,  North  Carolina  Sixes,  rise  and  fall  as  favor- 
ites according  as  they  are  doubtful  or  steady  values. 
The  whole  life  and  zest  of  the  market  lie  in  incessant 
undulations.  Take  up  any  annual  registry  of  the  Stock 
Exchange,  and  you  can  check  off  in  a  moment  the  tem- 
porary "  fancies  "  of  the  year  by  selecting  such  as  show  the 
widest  vibrations.  The  serious  thing  of  existence  is  to 
buy  New  York  Central  at  124  and  sell  it  at  180,  leaving 
the  new  purchaser  to  find  his  profit  where  he  can.  Illinois 
Central  in  1862  sold  for  60,  and  was  exceedingly  popular. 
Six  years  later  it  was  almost  out  of  the  market,  and  the 
few  buyers  paid  from  145  to  159  for  their  shares.  In- 
vestment ruined  it  for  Wall  Street. 

Not  only  is  uncertainty  an  immense  force,  but  its 
power  is  doubled  by  that  strange  perplexity  of  the  mar- 
ket, arising  from  the  great  difference  in  the  effects  of  the 


214  MEN  AND   MYSTERIES   OF  WALL   STREET. 

same  laws.  The  influences  which  one  day  will  produce 
a  sharp  rise  or  fall,  at  another  time  may  cause  only  the 
feeblest  ripples.  Thus  a  number  of  dealers  may  be 
short  of  shares  or  gold.  They  may  be  very  short,  anti- 
cipating a  heavy  decline.  Presently  comes  a  panic. 
Everybody  perceives  that  the  market  has  been  oversold. 
The  bears  turn  and  buy  in  order  to  cover  their  shorts. 
The  bulls  are  also  purchasing. 

On  January  23,  1869,  the  Gold  Board  had  this  com- 
plexion. Yet  the  effect  was  seen  only  in  a  rise  from 
135|  to  136 1.  Eight  months  later  a  similar  complexity 
carried  gold  up  to  160,  with  consequences  sufficiently 
known.  Stocks  under  such  contingencies  will  rise  some 
three  or  four  per  cent,  and  again,  as  was  the  case  with 
Erie  on  November  14,  1868,  shares  that  sell  in  the 
morning  at  36|  may  be  52J  before  evening.  Here  is 
the  doubtful  within  the  doubtful,  and  half  the  success 
of  operators  is  in  their  ability  to  take  a  rapid  survey 
of  the  market,  and  judge  whether  a  fluctuation  be  final 
or  the  prelude  of  a  corner. 

The  influence  .of  legislation  on  prices  involves  similar 
perplexities.  When  Hooper's  bill  was  reported  in  Con- 
gress early  in  1868,  and  there  was  a  general  belief  that 
its  passage  was  certain,  thus  effectually  closing  up  our 
national  indebtedness,  governments  rose  markedly.  The 
subsequent  death  of  the  measure  in  the  Senate  produced 
a  corresponding  reaction.  Operators  in  possession  of 
Washington  secrets  made  immense  sums.  When  Grant's 
message  in  the  fall  of  the  same  year  appeared,  govern- 
ments, so  far  from  bounding  up,  as  they  might  natu- 


MOBILITY   OF   STOCK.  215 

rally  have  been  expected  to  do  under  the  inspiriting 
effects  of  the  Executive  document,  remained  either 
stationary  or  with  a  fractional  decline.  A  vote  to  increase 
the  fare  on  the  New  York  Central  or  to  reduce  it  on  the 
Illinois  roads  has  seriously  affected  the  Exchange  at  one 
period  and  been  without  any  influence  at  another.  The 
New  York  Legislature  attempted  to  punish  Vanderbilt 
for  not  spending  money  freely  to  defeat  Jay  Gould  and 
the  Erie  Act.  A  pro  rata  freight  bill  was  introduced 
and  urgently  pushed.  Its  effect,  had  it  passed,  would 
have  been  to  greatly  decrease  the  earnings  of  the  Cen- 
tral. Nevertheless,  in  the  share  market  Erie  yielded 
more  than  either  of  the  Vanderbilt  stocks,  upon  recep- 
tion of  the  news. 

Brokers  have  a  theory,  that  when  gold  is  high  stocks 
should  be  high ;  greenbacks  being  worth  less,  stocks 
should  be  worth  more.  A  fall  in  gold  of  two  per  cent 
has,  time  and  again,  sent  speculative  stocks  down  from 
three  to  eight  per  cent.  Yet  on  December  20,  1869, 
without  any  other  cause  at  work  save  the  heave  and  flux 
of  an  ordinary  market,  gold  dropped  f  by  steady  frac- 
tions through  the  day,  while  stocks  rose  an  average  of 
one  per  cent. 

There  is  a  certain  grim  satire  in  some  of  the  influ- 
ences affecting  stocks.  November  24,  1869,  there  was  a 
rumor  that  the  Fisk  party  was  to  be  ousted  from  the 
Erie  direction,  and  that  Daniel  Groesbeck  had  been  ap- 
pointed receiver.  The  stock  of  the  broad  gauge  rose  two 
per  cent  in  consequence  !  A  like  result  followed  upon 
the  cable  despatch  announcing  that  the  English  bond- 


216  MEN  AND   MYSTERIES   OF  WALL   STREET. 

holders  were  going  to  institute  litigation  against  the 
road. 

The  new  Tennessee  bonds  at  1  P.  M.,  December  27, 
1869,  were  quoted  at  45£.  The  street  presently  learned 
that  a  committee  had  been  elected  for  the  purpose  of 
influencing  Nashville  legislation,  so  as  to  insure  en- 
hanced value  to  the  securities.  In  two  hours  after  the 
bonds  were  at  47. 

The  whisper  that  the  directors  of  a  company  will  omit 
the  usual  dividend  has  an  instant  effect  in  depressing 
stock.  On  November  11,  1869,  Pacific  Mail  fell  from 
60f  to  56£,  because  of  such  a  rumor.  St.  Paul  not  long 
since  was  buoyed  up  to  116^  by  anticipations  of  large 
stock  and  cash  dividends.  When  the  directors  had  un- 
loaded at  heavy  profits,  these  dreams  were  suddenly  dis- 
sipated, and  the  shares  declined  to  60. 

The  disastrous  consequences  of  corners  have  been 
already  alluded  to,  but  the  influences  of  cliques  upon 
stocks  are  not  limited  to  these  grand  operations.  When 
the  attempt  of  the  Erie  managers  to  get  control  of  the 
Columbus,  Chicago,  and  Indiana  Central  Eailroad  failed 
ingloriously,  the  stock  was  knocked  down  six  per  cent 
in  revenge.  This  was  February  1,  1869,  and  the  quota- 
tions of  sales  amounted  to  only  eight  or  nine  hundred 
shares,  illustrating  the  cheap  way  in  which  prices  can 
be  changed. 

The  inter-sympathy  between  stocks  is  remarkable. 
November  6,  1869,  there  was  a  break  in  Chicago  and 
Northwest.  St.  Paul,  Hudson,  Chicago  and  Alton,  all 
fell  5-20s  declined  4£.  Mississippi  6s  dropped  six 


MOBILITY   OF   STOCK.  217 

per  cent.  Eock  Island  showed  a  loss  of  5J.  Central, 
Hudson,  and  Harlem  are  very  sensitive  to  whatever  en- 
hances Erie. 

The  Cuban  insurrection  has  at  different  times  affected 
Governments  ;  now  causing  a  slight  fall  in  fear  of 
Spanish  complications,  and  again  leading  to  a  rise,  from 
the  fact  that  the  revolutionary  party  entered  the  market 
as  purchasers,  in  order  to  reinvest  the  money  previously 
employed  in  Havana  trade. 

In  its  panics,  Wall  Street  is  especially  unreasonable. 
Indeed,  there  is  not  a  safer  method  of  profit  in  existence 
than  to  watch  the  periodical  depressions  of  securities ; 
and  to  buy,  buy,  buy  as  soon  as  the  downward  pressure 
is  fully  under  way.  When  the  White  fraud  was  discov- 
ered in  the  summer  of  '68,  the  loss  by  forgeries  was  some- 
thing like  $  200,000  ;  while  the  shares  of  the  six  com- 
panies whose  certificates  had  been  tampered  with  were 
sold  down  to  the  equivalent  of  a  loss  of  ten  millions. 

The  mere  sale  of  a  few  millions  of  gold  by  Secretary- 
Chase,  in  the  spring  of  '64,  sent  stocks  tumbling  from 
five  to  twenty-five  per  cent ;  and  the  gold  which,  in  the 
second  week  of  April,  was  held  at  189,  was  offered  on 
the  18th  for  168,  with  no  one  to  take  it.  It  was  the 
same  way  in  September,  1869 ;  the  depression  in  stocks 
being  due  to  purely  artificial  causes,  and  the  purchasers 
who  had  the  courage  to  buy  at  the  fall  insuring  to 
themselves  enormous  gains. 

Nor  are  these  fluctuations  below  intrinsic  value  con- 
fined to  special  and  sensational  crises.  They  are  a  part 
of  the  history  of  every  year.  In  the  table  given  at  the 
10 


218  MEN  AND   MYSTERIES   OF   WALL   STREET. 

commencement  of  this  chapter  a  basis  for  the  judg- 
ment of  values  is  afforded  in  cases  where  the  dividend 
or  interest  is  sure.  Its  application  to  Government, 
State,  and  Eailroad  bonds,  in  which  the  element  of  sus- 
picion has  the  least  influence,  would  illustrate  the  op- 
portunities of  speculation  very  forcibly.  Unfortunately, 
such  an  inquiry  would  be  complicated  by  the  fact  that 
in  some  cases  coin  interest  is  paid ;  while,  in  others, 
peculiar  circumstances  have  affected  confidence  either 
advantageously  or  disastrously,  but  in  ways  requiring 
constant  explanation.  What  is  true  of  the  more  stable 
classes  of  investment  is  necessarily  even  more  a  fact  in 
regard  to  those  descriptions  of  stock  in  which  either  the 
dividend  is  variable  or  the  management  untrustworthy. 
Nevertheless,  there  are  points  in  the  course  of  prices  at 
the  New  York  Exchange  which  can  be  rendered  clearer 
by  a  comparison  with  the  theoretical  scale  of  values. 
The  year  1868  was  an  active  one  for  stocks.  It  is,  in 
fact,  more  representative  than  either  the  preceding  or 
succeeding  twelve  months.  The  rates  of  the  principal 
shares  during  each  month  are  now  before  us.  Talcing 
bank  stock,  which  is  altogether  held  for  investment,  we 
find  a  few  of  the  New  York  banks  which  conform  with 
the  figures  of  the  table.  Thus,  subjoined  are  the  names 
of  four  banks,  the  par  value  of  whose  shares  is  100,  on 
which,  for  the  year,  ten-per-cent  dividends  were  declared. 
Selling  at  $  142|,  they  would  consequently  be  equivalent 
to  an  investment  in  the  proportions  of  one  hundred  dol- 
lars at  seven  per  cent.  We  give  the  lowest  and  highest 
bids,  with  the  comparative  cheapness  and  dearness  of 
the  stock,  taking  142f-  as  the  true  value. 


MOBILITY    OF    STOCK.  219 


America  .        $136=  Of    $145    =    2|  Disadvantage  to  buyer. 

New  York    .       133=  94      140   =    24  Advantage 
Fulton       .         .160=  160    =  17|  Disadvantage     « 

Corn  Exchange    124  =  184       135£  =    7f  Advantage         " 

The  highest  sale-price  of  twelve  other  banks  with  par 
100,  and  with  10  per  cent  dividends,  is  given  below:  — 

Atlantic  .          .     103  Supposed  advantage  to  buyer®  1424  =$394 

Butch.  &  Drovers'  135  "  «  «  7* 

Import.&Traders'135  "  "  «  74 

Commerce     .130  «  «  «  124 

Commonwealth     116  «'  "  «  264 

Republic  .        .     125  £  "  «  «  17| 

Hanover        .117  "  "  «  254 

Market              .     116  "  "  «  264 

Mech.  Bank.  Asso.117  "  "  «  254 

Mer.  Exchange      120  "  «  «  224 

National        .110  "  «  «   "          324 

St.  Nicholas      .     112  «  «  «  304 

Shoe  &  Leather    125£  <4  "  «  17f 

It  should  be  added,  that  many  in  the  above  list  sold 
from  five  to  ten  per  cent  lower  at  other  sales.  The  fig- 
ures in  the  last  column  help  to  illustrate  a  general  law  in 
stocks,  namely,  that  whenever  even  the  vaguest  suspicion 
lurks  about  an  investment,  it  never  rises  to  the  maximum 
of  its  dividend-bearing  worth.  Thus  the  Marine  Bank 
declared  a  dividend  of  16  per  cent.  That  would  have 
placed  its  genuine  value  at  228,  but  it  actually  sold  for 
150.  The  Chatham,  with  the  same  dividend,  sold  for  145. 
The  Park  Bank  declared  fourteen-per-cent  dividend. 


220  MEN  AND   MYSTERIES   OF  WALL   STREET. 

That  would  be  equal  to  $  200  at  seven  per  cent,  yet  the 
stock  sold  no  higher  than  155.  The  Seventh  Ward  sold 
for  112  on  an  eight-per-cent  dividend.  This  was  $  2| 
below  the  table.  Per  contra,  the  City,  with  twelve-per- 
cent dividend,  sold  for  186-190.  The  tabular  value 
would  be  171f,  giving  an  excess  of  over  $  15  on  each 
share.  The  Manhattan  shows  a  vastly  greater  excess  in 
its  selling  value. 

Passing  to  railroads,  we  will  first  select  three  whose 
dividends  naturally  kept  them  mainly  in  the  hands  of 
investors. 


Pa,     DMdend,  litest. 

Panama  .  .  .100  24  per  cent  342f  290  3G9 
Hartford  and  New  Haven  100  12  "  171f  213  225 
New  York  and  "  100  10  "  142f  133  159 

It  will  readily  be  seen  that  Panama  at  290  was  a  very 
cheap  purchase,  and  that  the  confidence  of  purchasers 
was  sufficient  to  carry  it  considerably  above  $  342f-, 
which  would  be  the  real  worth  when  money  loans  for 
seven  per  cent.  New  York  and  New  Haven  was  at  least 
nine  per  cent  too  low  when  at  133.  Hartford  and  New 
Haven  sold,  at  its  lowest,  for  forty  per  cent  above  what 
a  twelve-per-cent  dividend  would  naturally  appreciate  a 
stock.  Illinois  Central  and  Hudson  Eiver  might  have 
been  added  to  the  others,  but  the  dividend  of  the  former 
road  was  complicated  by  a  stock  bonus,  and  the  latter 
line  was  subjected  to  a  speculative  bull  movement  which 
gave  it  a  fictitious  value. 

It  may  not  be  inadvisable,  however,  to  test  the  table 


MOBILITY   OF   STOCK.  221 

by  the  prices  of  a  few  specially  active  stocks   given 
below  :  — 

Par.    Dividend.  -^J™      Lowest.  Highest. 

Chicago,  Rock  Island,  and  Pacific  100  10  142f  85  118 

Chicago  and  Alton        .        .         100  10  142f  120  158£ 

Chicago,  Burlington,  and  Quincy  100  10  142f  138  175 

Cleveland,  Col.,  Gin.,  and  Indiana  100  7  100  75  110 

Cleveland  and  Toledo       .         .     100  7  100  95  113 

Dubuque  and  Sioux  City     .          100  7  10039-50  101 

Lake  Shore      ....     100  7  100  95  114 

Rensselaer  and  Saratoga      .          100  6£      92f  84  95f 

Adams  Express       .          .         .100  5        7  If  46  80£ 

Western  Union  Telegraph   .         100  4        57^-  33  39J 

With  the  exception  of  the  first  and  the  last  stock 
on  the  list,  the  reader  will  perceive  the  range  of  prices 
to  have  been  in  each  case  above  and  below  the  standard 
of  the  seven-per-cent  table.  Eock  Island  this  year 
labored  under  the  disadvantage  of  a  lawsuit,  and  also 
of  a  heavy  new  issue  of  shares  representing  construc- 
tion expenses,  and  therefore  temporarily  depressing  the 
property.  "Western  Union  was  buried  beneath  the  im- 
mense weight  of  the  Russian  Extension  debt,  which  the 
directors  had  neatly  shifted  from  their  own  shoulders  to 
those  of  the  shareholders.  All  the  other  properties  rose 
or  fell  beyond  the  unit  of  true  value  calculated  on  a 
seven-per-cent  basis. 

We  have  directed  attention  to  the  apparent  corrobora- 
tion  of  the  scale  by  the  actual  vibrations  of  the  market, 
simply  to  show  that  there  is  a  sense  of  some  governing 
unit  of  value  in  the  minds  of  all  dealers.  With  the 
exception  of  a  few  of  the  banks,  it  has  been  seen  that 


222  MEN   AND   MYSTERIES   OF  WALL   STREET. 

the  table  affords  a  near  average  of  the  intrinsic  worth 
of  the  stock  cited  above.  Buyers  of  shares  at  figures 
below  the  seven-per-cent  unit  would  have  been  secure 
of  ultimate  profit.  Holders,  when  the  rates  were  above 
that  unit,  would  have  been  prudent  had  they  sold  at 
once.  The  reader  ought  to  thoroughly  understand,  how- 
ever, that  there  is  no  royal  road  to  speculation.  Given 
all  the  conditions  of  the  problem,  and  profits  could  be 
ciphered  out  with  the  accuracy  of  a  mathematical 
demonstration.  But  the  unknown  quantities  are  the 
stumbling-blocks  of  system-mongers.  Integrity  and 
ability  in  directors,  the  earning  capacity  of  the  property 
of  a  corporation,  the  chances  of  the  future  as  well  as  the 
past,  are  essential  points  to  the  final  judgment,  and  the 
rates  of  the  Exchange  are  averagely  the  measure  of  in- 
creasing or  decreasing  faith  in  the  dividend  worth  of  a 
security. 

Successful  operators  unquestionably  have  a  mental 
rule  of  valuation.  By  processes  which  they  cannot  ex- 
plain even  to  themselves,  they  know  when  stock  is  a 
good  purchase,  and  when  its  price  is  running  too  high. 
None  of  them  would  allow  that  a  system  is  possible,  or 
could  perfect  their  combinations  except  by  an  uncon- 
scious use  of  this  very  impossibility.  For  the  sake  of 
illustration,  therefore,  and  with  the  preliminary  warning, 
that,  at  best,  the  sale  is  only  approximately  correct,  we 
propose  to  continue  our  glance  at  the  opportunities  of 
speculation  on  the  seven-per-cent  interest  basis. 

Panama,  in  1868,  was  a  good  investment  at  342f.  A 
hundred  shares,  costing  $  34,285|-,  would  have  netted 


MOBILITY   OF   STOCK.  223 

twenty-four  per-  cent  in  four  successive  payments  on 
each  certificate.  Twenty-four  per  cent  on  the  par  of  a 
hundred  shares,  and  seven  per  cent  on  the  selling  rate, 
would  each  give  $  2,400.  A  capitalist  having  sufficient 
faith  in  this,  and  with  money  at  command  for  purchas- 
ing and  holding  100  shares  even  at  400  as  the  quotation, 
could  easily  have  made  six  times  the  dividend  profit  by 
buying  and  selling  this  small  even  lot  just  ten  times 
during  the  year.  In  January  the  stock  was  290.  In 
February  it  was  345.  Buying  at  the  former  price  and 
selling  at  the  latter,  he  would  have  cleared  $  5,500. 
In  March  he  could  have  bought  at  330  and  sold  at  346  =  $  1,600 
"  May  "  «  back  at  315  "  "  330£  —  1,525 

"  June         "  "      "         329|     "        "    339  =        925 

"July          "  "      "         330  and  sold  in  Aug.  at  368  3,800 

"  Oct.  "  «      "         330      "        "        «    345 1,500 

"  Dec.          "  "      "         327£     "        "        "    340  1,250 

Giving  him  his  money  back,  and  a  profit  of        .         .         $  10,600 

With  the  exception  of  the  sales  of  May  and  June  he 
would  have  acted  throughout  upon  the  principle  that 
stocks  quoted  above  their  investment  worth  may  be 
safely  sold  with  a  view  of  buying  back  at  a  great  decline. 
It  will  be  noticed  that  the  highest  figure  of  purchase  in 
this  case  was  330.  A  twenty-per-cent  margin  on  that 
price  would  have  been  $  6,600.  The  operator,  with  that 
advance,  could  have  easily  performed  every  part  of  the 
series  of  transactions,  and  have  closed  them  with  his  six 
thousand  changed  to  twenty-one.  A  speculation  on  a 
margin,  however,  is  more  profitable  in  the  lower-priced 
shares.  Take  Chicago  and  Alton.  It  paid  ten-per-cent 


224  MEN   AND   MYSTEEIES   OF  WALL   STEEET. 

dividends,  was  well  managed,  and  represented  a  property 
that  was  of  growing  value.  One  hundred  shares  at 
$  14,200  was  a  good  purchase.  The  men  who  went  into 
the  market  with  a  firm  faith  in  the  worth  of  the  stock 
even  at  142  must  have  made  money.  They  could  have 
bought  at  120  in  April,  and  sold  in  August  at  144.  That 
would  have  been  a  clear  gain  of  $24  on  the  share. 
What  ordinary  business  pays  such  profits  ?  A  buyer 
might  have  said  in  January :  "  I  will  buy  whenever  the 
stock  touches  130  or  falls  below  it.  My  broker  shall 
sell  at  every  six-per-cent  rise  on  this,  and  buy  again  on 
a  six-per-cent  fall.  I  will  purchase  no  more  than  I  can 
really  hold,  even  if  it  falls  to  zero,  but  will  only  place 
twenty  per  cent  on  deposit.  Above  142,  I  will  let  it 
alone."  He  sends  up  to  New  York  two  thousand  dollars, 
and  his  broker  acts  faithfully.  Now  observe  the  figures  : 
January,  130-136;  February,  128-136;  April,  120- 
128J ;  June,  130  - 136  ;  August,  145  - 138| ;  November, 
135-150.  The  other  months  show  like  vibrations, 
but  the  prices  were  such  that  the  broker,  with  •  his- 
peculiar  orders,  would  not  have  been  warranted  in 
buying.  Even  on  six  per  cent,  however,  the  customer 
could  not  have  failed  to  clear  $  3,600,  besides  holding 
hisjnargin  intact. 

This  is  conservative  speculation.  There  were  men, 
that  year,  who  bought  Dubuque  and  Sioux  City  at  39,  and 
sold  it  for  100.  They  had  the  courage  to  wait  from  Jan- 
uary to  September.  They  could  have  bought  a  thousand 
shares  on  a  margin  of  $4,000,  and  would  have  been 
worth  $  65,000  in  nine  months.  The  stock  paid  seven 


MOBILITY   OF   STOCK.  225 

per  cent,  and  was  therefore  well  worth  $  100,  even  to 
hold. 

The  course  of  Chicago,  Burlington,  and  Quincy  was 
a  beautiful  example  of  the  advantage  of  solid  pur- 
chases. It  could  have  been  bought  in  January  for  138. 
In  March  and  September  there  were  semiannual  five- 
per-cent  dividends.  By  December  the  stock  could  have 
been  sold  out  for  175  ;  that  would  have  given  $  37  on 
each  share.  This  is  the  ideal ;  it  presupposes  buying 
at  the  lowest  ebb,  and  selling  just  when  the  wave  crests 
for  a  fall.  Such  extremes  are  the  luck  of  the  lottery. 
There  is  plenty  of  good  profit  open  in  the  market,  with- 
out any  of  these  miracles.  Cleveland  and  Toledo  was 
cheap  for  any  price  below  100.  It  was  dear  for  any 
price  which  reached  much  above  that  figure.  Within  96 
and  106,  any  one  who  knew  about  the  road  might  have 
safely  held  the  stock  A  buyer,  acting  upon  this  belief, 
would  have  made  thirty  per  cent  in  five  transactions 
with  certainty,  so  evenly  did  the  stock  fluctuate. 

There  are  hundreds  of  interesting  features  in  the 
prices  of  '68.  Thus  Eock  Island  sold  down  to  85  in 
April,  and  it  seems  incredible  that  its  first  rebound  was 
only  93.  People  who  knew  this  road,  and  dared  to 
buy,  even  at  the  latter  depression,  could  have  sold 
in  June  with  a  profit  of  $  8  on  a  share  ;  in  July,  with 
a  gain  of  $  17  ;  in  August,  with  an  enhancement  of 
$  19 ;  or  they  could  have  held  on  till  December,  and 
made  $  250  on  every  ten  shares.  In  Hudson,  between 
125  and  138,  there  were  incessant  profits  ;  and  the 
variations  of  each  month  would  have  taught  an  oper- 
10*  o 


226     MEN  AND  MYSTERIES  OF  WALL  STREET. 

ator  that  these  limits  were  to  be  the  year's  rates.  An 
average  of  62 1  as  a  unit,  with  buying  at  not  less  than 
eight  per  cent  below,  and  selling  always  at  eight  per 
cent  above  that  figure,  would  have  been  assured  profit 
to  any  one  in  Milwaukee  and  St.  Paul.  But  the  chances 
of  stocks  can  be  seen  in  a  better  light,  if  examined  by 
the  record  of  ten  years.  We  have  before  us  a  partial 
registry  from  1860  to  1870.'  It  is  not  easy  to  persuade 
one's  self,  in  the  face  of  the  facts  revealed  by  this  ex- 
traordinary table  of  prices  during  the  past  decade,  that 
a  capitalist  who  has  a  fair  proportion  of  foresight,  and 
is  willing  to  wait,  can  fail  to  make  more  money,  and 
make  it  with  greater  security  through  speculation,  than 
by  any  other  of  the  ordinary  methods  of  investment. 
The  venture  of  a  month  may  be  treacherous,  but  the 
courage  of  a  year  is  golden. 

In  1860  the  gates  of  Wall  Street  opened  to  the  provi- 
dent an  opportunity  for  becoming  rich  such  as  cannot  be 
found  elsewhere  in  history.  Men  could  have  bought  Erie 
for  8|,  Harlem  for  8J,  Michigan  Southern  for  5,  Cleve- 
land and  Pittsburg  for  the  same  price,  Prairie  du  Chien 
for  2.  Erie  could  have  been  sold  in  eight  months  at 
an  advance  of  five  times  the  purchase-money,  and 
Harlem  at  three  times  the  cost.  In  seven  months, 
Prairie  du  Chien  was  worth  eight  times  what  it  sold  for 
in  February.  In  six  months,  Michigan  Southern  was 
quoted  at  25.  Five  hundred  shares  in  February  would 
have  cost  only  $2,500;  in  August  their  owner  could 
have  sold  for  $  12,500.  Twenty  thousand  dollars  in  six 
short  months  converted  into  one  hundred  thousand ! 


MOBILITY   OF   STOCK.  227 

And  this  is  but  half   the  story.      Observe  the   table 
below. 

Jan.        Feb.        May.       Aug.       Mar.      June 
1860.       1860.       1863.      1863.       1864.       1864. 
Erie,       .        .         .         .         8£     .         .     105     .   '     .     126 
Harlem,      ...  8^        ...    179     .        .     285 

July. 

Hudson, 35      .       180 

Michigan  Central,        .  35 152 

April. 

Southern, ...         5      ....      118 
Cleveland  and  Pittsburg,         6|          ....  132 

1864.    Jan. 

Chicago  and  Rock  Island,     .         .  42*   .         .         .  145 
Prairie  du  Chien,     ...          2  .   90 

Sept 
Del.  Lack.  West,  54 265 

Cleveland  and  Toledo,        .19 150 

The  purchaser  of  Erie  in  1860  would  have  found  one 
dollar  turned  to  twelve  in  May,  '63.  In  four  years,  a 
dollar  in  Michigan  Southern  would  have  changed  to 
twenty-three.  Ten  thousand  grown  to  two  hundred 
and  thirty  thousand !  Two  thousand  dollars  in  Prairie 
du  Chien  would  have  become  ninety  thousand  in  '63. 
Ten  thousand  in  Cleveland  and  Pittsburg  would  have 
bloomed  out  into  two  hundred  thousand  by  April,  '64 

The  difference  of  gold  does  not  account  for  these  fig- 
ures. One  dollar  increased  to  three  dollars  and  ten 
cents  was  the  .utmost  contrast  that  the  gold-market  af- 
forded through  all  the  years  of  the  war.  Even  the  arti- 
ficial influences  at  work  in  stocks,  which  undoubtedly 
produced  the  extreme  quotations  of  Harlem,  Erie,  and 
Prairie  du  Chien,  were  as  nothing  compared  to  the 
legitimate  effects  of  the  enhancing  value  of  railroad 
property. 


228  MEN  AND   MYSTERIES   OF  WALL   STREET. 

Moreover,  it  would  seem  as  if  none  of  the  usual  ex- 
planations of  the  depression  of  1860  were  sufficient  to 
afford  a  basis  for  hesitation  to  invest.  All  the  roads 
were  poor.  Many  were  in  debt.  Dividends  were  infre- 
quent, and  the  earnings  of  the  great  lines  gave  no  prom- 
ise of  increase.  But  even  at  two-per-cent  dividends  a 
year,  shares  were  cheap  at  28.  At  one  half  of  one  per 
cent,  they  were  a  fair  purchase  at  seven.  War,  indeed, 
was  imminent ;  but  even  the  regular  increase  of  popula- 
tion, continued  -emigration,  and  the  lowest  estimates  of 
the  progressive  wealth  of  the  nation,  ought  to  have  fur- 
nished a  conservative  basis  for  confidence  in  the  inevita- 
ble increase  of  these  securities.  That  they  did  not  have 
that  effect  with  the  majority  of  investors  is  clear  from 
the  mere  fact  of  such  extreme  quotations  as  are  to  be 
found  in  the  previous  page,  and  it  is  probable  that  the 
immense  profit  which  the  future  disclosed  really  fell  to 
the  very  few  capitalists  who  chanced  to  have  confidence 
as  well  as  money.  These  men  became  directors,  infused 
energy,  prudence,  and  economy  in  the  management,  and 
in  no  small  degree  created  the  wealth  which  ultimately 
flowed  in  to  them.  Some  of  our  greatest  railway  kings 
date  from  that  period. 

The  low  prices  of  the  beginning  of  the  last  decade  ex- 
tended even  to  some  of  the  most  undoubted  properties. 
Panama,  in  April,  '61,  was  97£.  In  July,  '64,  it  sold 
for  300.  Philadelphia  and  Beading,  which  dragged  in 
'62  at  35,  sold  up  and  down  in  April,  '64,  from  165  to 
125.  Between  '62  and  '64  there  was  a  fortune,  and  the 
fluctuations  of  April  would  have  given  any  lucky  opera- 


MOBILITY   OF  STOCK.  229 

tor  a  competence.  Chicago  and  Alton  sold,  in  '62,  for 
16 ;  in  '68  it  reached  158£.  Illinois  Central  in  '62  sold 
for  60.  Chicago,  Burlington,  and  Quincy  was  at  the  same 
figure.  In  '68  the  former  sold  for  158,  and  the  latter 
for  175.  In  '65  both  the  New  York  and  New  Haven 
and  the  Harlem  were  subject  to  heavy  dealings.  To-day 
they  are  out  of  the  market ;  one  because  of  its  large  divi- 
dends, the  other  from  its  steadiness  and  uselessness  for 
speculation.  For  six  months,  in  '66,  New  York  Central 
sold  down  below  100,  and  might  have  been  bought  in 
the  largest  quantities  at  91.  The  purchaser,  from  July 
onward  to  the  present  day,  could  have  always  sold  at  a 
profit,  and  even  in  that  year  might  have  realized  from 
twenty  to  thirty  per  cent. 

In  '66  Pacific  Mail  fluttered  between  180  and  240. 
Atlantic  Mail  rose  and  fell  in  weekly  see-saws  from  108 
to  136  through  January  and  February.  Pennsylvania 
Coal  vacillated  from  131  to  170.  New  Jersey  Eailroad 
stock  waved  up  and  down  between  120  and  145.  Erie 
pulsed  from  55  to  95. 

How  easy  it  would  be  to  fill  a  book  with  these  figures  ! 
The  charts  teem  with  them.  There  is  not  a  stock  of 
genuine  worth  which  does  not  indicate,  by  the  registry, 
alternations  of  hope  and  fear  in  wide  percentages  and 
with  unbounded  opportunities  for  speculators  to  buy  with 
confidence  of  profit.  Brokers  tell  us  that  about  one  in 
a  hundred  buy  in  this  manner.  The  ninety-nine  mean 
to  do  so.  They  make  their  calculations,  add  up,  sub- 
tract, wander  hither  and  thither  for  points,  try  this  sys- 
tem and  that  theory,  are  wise  to  the  extent  of  their  wis- 


230.  MEN   AND   MYSTERIES   OF   WALL   STREET. 

dom,  and  come  forth  from  their  ventures  shorn  of  all 
their  golden  fleece.  With  a  chart  of  prices  before  one, 
this  fatality  seems  inexplicable.  But  facts  are  difficult 
matters  to  combat,  and  the  facts  are  indubitably  discour- 
aging. There  is  a  solution  of  the  failure,  however,  which 
has  already  been  suggested.  These  ninety -nine  buy  on 
margins,  ten  per  cent  or  twenty  per  cent  as  the  case  may 
be,  but  always  extending  themselves  to  the  utmost  limit. 
They  also  buy  "  active  "  stocks,  whose  fluctuations  are  of 
ten  to  forty  per  cent,  giving  large  profits  if  the  tide  runs 
up,  but  sweeping  away  the  advances  of  the  outsider  in 
a  moment  whenever  the  market  breaks.  If  they  pur- 
chased "  out  and  out,"  the  whole  aspect  of  things  would 
change.  The  cliques  could  not  control  as  at  present,  and 
speculation  would  become  an  affair  of  relative  judgment. 
There  would,  of  course,  be  fluctuations,  since  human  na- 
ture remains  tolerably  constant  in  directions  of  com- 
panies, money-lenders,  and  purchasers,  and  shares  would 
be  buoyant  or  depressed  beyond  their  just  proportion. 
The  over-confident  would  lose  by  holding,'  and  the  sus- 
picious would  sell  where  they  ought  to  buy.  But  the 
average  of  the  unlucky  would  surely  decrease. 


IN  THE  GOLD   ROOM.  231 


CHAPTER   XII. 

IN   THE   GOLD   ROOM. 

JUST  beyond  the  dusty  entrance  to  the  Long  Room, 
on  New  Street,  is  a  narrow  doorway  leading  into  a 
grimy  and  fusty  corridor.  If  a  stranger  continue  on,  he 
will  find  himself  descending  sundry  foot- worn  stairs,  and 
finally  arriving  at  an  inner  enclosure  with  a  private 
passage  to  the  Stock  Exchange  at  the  left,  and  a  tomb- 
like  causeway  in  front  of  him,  which  penetrates  through 
to  Broad  Street.  On  dull  days  he  might  wander  up  and 
down  through  this  perplexing  labyrinth  for  hours  without 
having  any  clearer  perception  of  how  to  reach  the  tem- 
ple of  the  Gold  kings  than  upon  his  first  ingress.  If 
haply  some  broker's  clerk,  sympathizing  with  his  distress, 
should  bravely  come  to  the  rescue,  he  would  guide  him 
back  to  the  twilight  of  the  New  Street  corridor,  and  in- 
dicate with  his  dexter  finger  two  doors  on  the  left,  whose 
sombre  and  inauspicious  aspect  would  strangely  contrast 
with  the  dreams  of  princely  splendor  with  which  deal- 
ings in  gold  by  the  hundred  millions  are  associated  in 
the  rural  mind.  Nothing  in  fact  could  be  so  dismal 
in  its  externals,  or  so  modestly  inconspicuous  in  its  ap- 
proaches, as  the  famous  Gold  Exchange.  We  have 
alluded  to  two  modes  of  entrance.  One  is  for  members, 
and  is  strictly  guarded  from  the  interior  by  the  Peter  of 


232  MEN  AND  MYSTERIES   OF  WALL   STREET. 

the  coin-market.  The  other  leads  to  the  free  gallery,  — 
a  scrimped  and  box-like  place,  mainly  devoted  to  office- 
boys  and  mischief.  There  is  yet  another  door  reached 
by  uncertain  ways,  where,  if  properly  provided  with 
tickets,  one  may  enter  and  discover  himself  in  an  upper, 
nest-shaped  eyrie,  affording  an  excellent  view  of  the  ex- 
citing scenes  below.  An  on-looker  from  this  point  per- 
ceives the  whole  contour  of  the  chamber.  In  front 
against  the  New  Street  side  is  the  raised  dais  of  the 
officers.  President  John  F.  Underhill  occupies  the  seat 
of  honor.  Near  him  is  the  desk  of  Secretary  Thomas  P. 
Akers,  with  an  under-clerk  at  his  side.  On  the  right  of 
the  President  is  the  stand  of  the  telegraph-operator  and 
beyond  are  the  open  doorways  of  committee-rooms.  To 
his  left  and  above  is  a  sort  of  reading-room,  where  half 
a  dozen  city  papers  are  on  file.  Before  him  is  the  foun- 
tain, shut  in  by  a  circling  iron  railing  perhaps  thirty 
feet  in  diameter,  and  consisting  of  a  Cupid  playing  with 
a  dolphin,  from  which  microscopic  streamlets  of  water 
fall  harmlessly  into  the  basin  beneath.  Its  aesthetic 
features  may  be  clear  as  a  melted  margin  to  brokers,  but 
to  ordinary  eyes  it  is  an  ineffable  vision  of  ugliness. 
Against  the  outlying  rail  the  operators  lean  idly,  or  join 
in  the  feeble  patter  of  offers  and  bids  which  are  pre- 
lusive of  the  coming  combat.  At  an  active  season 
the  fountain  begins  to  attract  brokers  as  early  as  nine 
o'clock.  But  the  real  business  of  the  day  starts  with 
ten  A.  M.  By  that  hour  the  floor  buzzes  with  the 
whisperings  and  murmurs  of  a  hundred  voices.  The 
President  rises  to  his  feet ;  the  gavel  rings  down  upon 


IN   THE   GOLD   ROOM.  233 

the  block,  and  the  bulls  and  bears  spring  forward  to 
the  contest. 

Broker.  "  5  J  for  fifty.  £  for  fifty,  —  fifty,  —  I  '11  give 
£  for  any  part  of  a  hundred." 

Voice.     "  Sold." 

The  Secretary  notes  down  13 5|  as  opening  price,  and 
$  100,000  as  the  amount  sold,  while  the  bids  continue 
with  renewing  fury. 

"  I  for  five  hundred,  —  give  a  £  for  —  " 

"  |  for  a  hundred." 

"  Take  'em.     How  much  ?  " 
.  "  Hundred  thousand,  —  take  fifty  more." 

"  £  for  twenty,  —  a  i,  —  a  \,  —  a  J,  —  for  any  part  of 
fifty." 

Other  Voices.  "  f  for  fifty."  —  "  £  for  a  hundred."  — 
"  I  '11  give  36  for  twenty." 

"Sold,"  — "Sold." 

President.  "Twenty  thousand  sold  to  Peters  &  Co: 
at  136." 

Voice.     "  That 's  my  bid,  Mr.  President." 

Second  Voice.     "  I  appeal." 

President.     "  Is  the  appeal  seconded  ?  " 

Several  individuals  uphold  the  new  claimant,  and  the 
question  goes  to  vote  precisely  as  at  the  Stock  Board. 
Then  the  battle  recommences,  with  perhaps  an  influx  of 
bears,  who  knock  the  metal  slowly  down  to  the  opening 
figure.  In  the  fall  the  noise  and  bustle  swells  to  high 
confusion.  Twenty  shout  at  once.  The  crowd  sways 
from  side  to  side,  and  the  officers  from  the  rostrum  find 
it  nigh  impossible  to  keep  abreast  with  the  biddings. 


234  MEN  AND   MYSTERIES   OF   WALL   STREET. 

Just  outside  of  the  extreme  verge  of  the  tumult  little 
groups  of  brokers  collect,  talking  with  nervous  quick- 
ness. They  are  borrowers,  and  are  arranging  for  loans  to 
cover  the  deficiency  of  yesterday's  transactions.  Here, 
as  in  stocks,  the  market  varies,  falling  as  low  as  four  or 
five  per  cent,  and  rising  to  seven  per  cent  coin  interest, 
or  to  turns  of  from  -^  upwards,  in  addition. 

To  understand  more  completely  the  object  of  these 
conferences,  it  will  be  necessary  to  explain  the  workings 
of  the  Gold  Exchange  Bank  arid  Clearing-House.  For 
some  time  after  the  national  coin  currency  became  a 
salable  commodity,  all  exchanges  between  buyer  and 
seller  were  effected  by  actual  transfers  of  gold.  During 
the  mid  hour  of  the  day  the  streets  were  thronged  by 
boys  hurrying  from  office  to  office  with  bags  of  the 
precious  metal.  These  canvas  sacks  were  marked  with 
the  figure  of  their  contents.  Quite  frequently,  either 
from  carelessness  or  fraud,  the  count  did  not  correspond 
with  the  tally.  Hence  constant  bickerings,  quarrellings, 
and  general  bad  feeling  among  dealers.  Occasionally 
the  specie-clerks  would  be  knocked  down  in  the  street, 
red  pepper  thrown  in  their  eyes,  and  the  thieves,  either 
in  light  carts  or,  in  winter  time,  on  runners,  would  dash 
off  with  their  spoils  before  the  police  could  be  warned. 
The  occurrence  of  two  or  three  raids  of  this  kind,  added 
to  the  troubles  in  the  count  of  coin,  led  the  brokers  to 
arrange  with  the  Bank  of  New  York  for  the  issue  of 
gold  certificates  based  on  actual  deposits.  Dealers  were 
provided  with  check-books,  for  which  a  large  guaranty 
payment  was  demanded,  and  the  certificates  passed  cur- 


IN   THE   GOLD   ROOM.  235 

rent  on  'change  as  good  deliveries  in  all  purchases  of 
gold.  It  corresponded  very  exactly  with  the  Bank  of 
Hamburg's  'banco  transactions.  In  August,  1865,  it  was 
discovered  that  this  certification  was  surrounded  by  great 
hazards.  During  that  month  Edward  B.  Ketchum,  of 
the  house  of  Ketchum,  Son,  &  Co.,  Exchange  Place,  sud- 
denly disappeared.  The  street  soon  rung  with  the  news 
of  forgeries  in  gold  checks  to  the  appalling  amount  of  a 
million  and  a  half.  Confidence  was  destroyed.  It  be- 
came apparent  that  a  new  system  must  be  introduced. 
The  Gold  Exchange  Bank,  with  its  associate  Clearing- 
House,  answered  to  all  the  conditions  of  security,  and 
the  Gold  Board  immediately  gave  it  official  sanction. 
The  method  of  settlement  under  the  new  order  of  things 
is  as  follows :  On  or  before  half  past  twelve  o'clock  a 
statement  of  all  the  purchases  or  sales  made  by  each  bro- 
ker on  the  preceding  day  must  be  rendered  to  the  bank. 
If  the  gold  bought  be  in  excess  of  that  sold,  a  check  for 
the  difference  must  accompany  the  statement.  If  de- 
posits in  gold  or  currency  are  not  kept  in  the  bank,  the 
coin  must  be  delivered  at  every  deficiency.  The  Board 
adjourns  at  twelve,  in  order  to  enable  tardy  dealers  to 
complete  their  accounts.  Provided  all  contracts  are 
honored,  the  bank  must  settle  by  two  P.  M.  In  case  of 
default  the  amount  in  abeyance  is  credited  or  debited 
to  the  broker  who  suffers  by  the  failure.  The  character 
of  the  paper  sent  in  to  the  bank  officers  will  be  better 
comprehended  by  the  subjoined  illustration  of  the  cus- 
tomary form :  — 


236 


MEN   AND   MYSTERIES   OF  WALL   STREET. 


Statement  of  Jew,  German,  &  Co.  to  New  York  Gold 
Exchange  Bank. 


Receive  from 

Gold. 

Philes  and  Sawes  . 

$  60,000 

Smith  and  Jones 

10,000 

Humphrey  Davy   . 

.  15,000 

Winthrop  Johns 

5,000 

Gardner  and  Smith 

.  20,000 

Spades  and  Stock 

30,000 

$  140,000 

Deliver  to 

Gold. 

Doe  and  Eoe  . 

$  30,000 

Harvey  and  Elderkin 

40,000 

Bacon  and  Herring 

.  20,000 

Israel  and  Son  . 

30,000 

Joseph  and  Ishmael 

.  10,000 

Rate. 

Currency. 

130 

$  78,000 

131 

13,100 

130 

19,500 

1311 

6,575 

130£ 

26,100 

130f 

39,225 

Rate. 

Currency. 

132 

$  39,600 

132^ 

53,000 

132f 

26,550 

133 

39,900 

132* 

13,225 

10,225 

$  182,500 


$  130,000 


$  182,500 


In  this  instance  operations  covering  $  270,000  in  gold 
are  effected  with  no  farther  direct  payment  than  that  of 
the  check  for  $  10,225.  Jew,  German,.  &  Co.  will  be 
credited  at  the  Bank  by  the  $  10,000  of  coin  due  them 
in  the  balance  of  purchases  over  deliveries,  and  the 
currency  check  makes  their  account  good  at  the  Clear- 
ing-House.  Had  the  sales  been  more  than  the  pur- 
chases, they  would  either  pay  in  the  difference  from 
their  bank  deposit  or  would  have  borrowed  it  in  open 
market  on  the  best  terms  that  could  be  secured. 

It  is  needless  to  add  that  this  beautiful  arrangement 
by  which  the  completion  of  contracts  is  rapidly  and  em- 


IN   THE   GOLD   ROOM.  237 

ciently  accomplished  by  the  simplest  figures  of  book- 
keeping, has  encountered  recently  a  great  deal  of  news- 
paper criticism.  The  fact  that  the  final  adjustment  of 
the  statement  may  often  be  made  by  the  transfer  of  a  com- 
paratively small  sum  of  money  is  pointed  at  as  a  proof 
of  the  gambling  tendencies  of  the  street.  That  a  man 
with  a  few  thousand  dollars,  if  he  can  get  the  credit, 
might  buy  fifty  times  what  he  had  cash  to  pay  for  is 
unquestionable.  Suppose  gold  at  135.  A  broker  with 
a  deposit  of  $  5,000,  his  entire  capital,  may  have  noticed 
that  for  the  past  ten  weeks  gold  has  seldom  been  below 
140,  and  in  no  case  has  fallen  to  134  He  studies  the 
external  causes  of  the  decline,  and  is  convinced  that 
they  are  inadequate  to  effect  the  market  except  briefly. 
Going  to  the  Gold  Eoom  and  finding  the  bears  hard 
at  work  forcing  the  metal  down  step  by  step  134£, 
134|_|_ij  a£  which  point  it  turns  back  oscillating  be- 
tween f  and  the  next  lower  fraction ;  he  snaps  up  an 
offer  of  $  100,000  specie  for  134f,  buyer  3.  Gold  may 
fall  sharply  to  130,  and  stay  there  for  seventy-two  hours. 
In  that  event  he  sells  $  100,000  at  130  cash,  and  sup- 
plements the  statement  to  the  Clearing-House  with  a 
check  for  $  4,625,  leaving  his  whole  capital  $  375.  Had 
it  fallen  to  129|,  he  would  have  been  left  without  a  mill. 
Per  contra,  however,  it  is  possible  to  conceive  that  the 
operator's  prescience  did  not  mislead  him.  From  134|, 
the  buying  price,  it  jumped  to  136,  '38J,  '40,  143,  and 
on  the  morning  of  the  third  day  was  at  145.  He  sells 
$100,000  cash  at  that  price,  and  on  rendering  his 
account  to  the  bank  he  claims  a  credit  in  differences 


238  MEN   AND   MYSTEEIES   OF  WALL   STREET. 

over  and  above  this  five-thousand-dollar  capital  of 
$  10,325.  So  far  as  the  machinery  of  the  Clearing- 
House  is  concerned,  it  will  readily  be  seen  that  if  the 
sales  and  purchases  were  always  at  a  profit  and  without 
default,  there  would  be  no  necessity  for  capital  on  the 
part  of  any  operator.  Why  the  interests  of  society  and 
of  legitimate  business  should  be  better  served  by  the 
conveyance  of  a  number  of  bags  of  gold  from  two  offices 
perhaps  three  streets  apart,  when  the  same  result  is 
reached  by  a  half-dozen  pen-strokes  at  the  Clearing- 
House,  is  one  of  those  metaphysical  mysteries  that 
brokers  find  hard  to  solve.  Unfortunately  the  felicity 
of  unvarying  success  is  so  rare  that  a  well-authenticated 
instance  of  it  is  not  to  be  found  in  the  annals  of  broker- 
age, and  for  the  rest  the  significant  "  Ten  up  "  is  heard 
too  often  at  the  Gold  Board  to  permit  any  one  to  imagine 
that  dealers  are  not  thoroughly  alive  to  the  financial 
status  of  their  neighbors,  and  by  no  means  willing  to 
entangle  themselves  in  transactions  with  men  whose 
capital  is  inadequate  to  meet  their  engagements. 

Five  minutes  spent  in  the  Gold  Eoom  is  sufficient  for 
a  stranger  to  master  its  distinctive  features.  A  thoiisand 
dollars  constitutes  the  unit,  and  "  I  '11  sell  any  part  of  a 
hundred  "  means  that  the  dealer  will  sell  any  portion  of 
$  100,000.  Beyond  this  there  is  nothing  to  explain. 
All  the  various  methods  of  purchase  or  sale,  the  mar- 
gins, loans,  and  every  technicality  of  the  Stock  Market 
are  equally  in  use  with  the  Gold-Brokers.  The  usual 
practice  of  dealers,  however,  is  to  buy  or  sell  either 
Cash  or  Eegular,  and  then  borrow  the  gold  or  green- 


IN  THE   GOLD   EOOM.  239 

backs  in  case  an  operation  is  to  be  prolonged  over  a 
series  of  weeks.  Options  are  employed  at  times  very 
freely,  but  the  general  custom  is  that  just  noted.  As 
from  the  very  nature  of  the  business  there  can  be  no 
daily  call,  the  duty  of  the  President  is  simply  to  pre- 
serve order  and  arbitrate  in  disputes.  Before  and  after 
the  regular  session  brokers  frequent  the  chamber  pre- 
cisely as  in  the  Long  Eoom  of  the  Stock  Exchange,  and 
till  three  P.  M.  there  will  always  be  found  a  more  or 
less  spirited  warfare  around  the  circuit  of  the  fountain. 
The  difference  of  one  day  over  another  is  simply  in  the 
relative  intensity  of  speculation. 

When  coin  has  other  value  than  that  belonging  to  the 
legal  tender  of  a  nation,  an  artificial  market  is  inevita- 
ble. With  a  great  people  such  a  condition  can  never  be 
permanent,  and  the  very  sense  of  the  temporary  charac- 
ter of  the  anomaly  gives  a  feverish  and  fitful  complexion 
to  dealings  in  bullion.  In  every  other  market  the  com- 
modity offered  for  sale  has  a  measure  of  worth  apart 
from  its  current  price.  With  coin,  however,  the  margin 
between  par  with  paper  and  the  buying  rate  constitutes 
the  sole  basis  of  its  utility  as  merchandise.  The  pre- 
mium is  everything,  and  the  precious  metal  in  itself  is 
nothing.  Moreover,  whether  from  education  or  from 
fundamental  laws  of  trade,  there  has  arisen  an  ineradi- 
cable impression  that  coin  transactions  have  more  of  the 
unsubstantial  than  those  of  commerce  or  stocks.  Gam- 
bling, or,  in  other  words,  the  trade  in  chance,  is  necessa- 
rily associated  more  or  less  intimately  with  every  human 


240  MEN   AND   MYSTERIES   OF  WALL   STEEET. 

pursuit ;  but  in  gold  sales  it  stands  forth  in  bold  relief. 
Chance  alone  creates  the  premium.  Chance  magnifies  it. 
Chance  annihilates  it.  With  specie  payments  the  Gold 
Boom  becomes  a  reminiscence.  A  silver-mine  is  opened 
in  Nevada.  Its  yield  is  prodigious.  The  company  earns 
a  thousand  dollars  for  every  ten  dollars  spent.  The  stock 
rises  by  startling  leaps.  The  shares  of  $  10  at  par  sell 
for  $  100.  The  Mining  Board  is  delirious.  Suddenly 
the  vein  gives  out  utterly.  The  debts  of  the  corporation 
equal  the  entire  worth  of  all  machinery.  The  stock 
whirls  down  to  zero.  Enlarge  the  comparison  to  the  di- 
mensions of  the  gold  market,  add  the  certainty  even  at 
highest  quotation  that  the  day  must  come  when  0  will 
indicate  the  premium,  and  the  reader  will  at  once  com- 
prehend why  the  Gold  Board  for  the  past  eight  years  has 
been  the  synonyme  of  all  that  is  maddening,  passionate, 
and  reckless  in  the  struggle  for  wealth.  In  that  human 
maelstrom  where  nothing  but  money  enters,  where  coin 
metal  exchanges  only  with  coin  paper,  where  trade  is 
stripped  of  all  its  illusions  and  men  battle  for  gold,  gold, 
gold,  with  a  naked  greed  and  fury  that  satirizes  life  be- 
yond all  the  imaginings  of  the  poets,  it  is  impossible  for 
the  combatants  to  be  other  than  natural,  carrying  their 
souls  in  their  faces,  revealing  in  every  tortuous  linea- 
ment the  exultations  and  the  despair  of  the  heart.  There 
are  individuals  who  have  staked  their  fortunes  on  the 
turning  of  a  card,  without  a  shadow  of  joy  or  anguish 
perceptible  in  their  bearing.  One  may  find  dozens  of 
operators  whose  interest  in  the  shaping  of  the  market 
cannot  be  discerned  by  any  ordinary  rules  of  scrutiny. 


IN   THE  GOLD   EOOM.  241 

But  on  the  genuine  field-days  of  the  Gold  Boom,  it  is 
hard  to  believe  that  the  general  aspect  of  the  tumult  is 
not  one  in  which  nature  throws  aside  its  veil.  In  the 
days  of  the  war  an  unexpected  victory  converted  the 
gold  arena  into  a  den  of  wild  beasts.  The  bulls  fought 
against  the  inevitable  decline  with  the  ferocity  of  gladi- 
ators. The  chaos  of  voices  and  the  stamping  of  feet 
shook  the  building  as  in  an  earthquake,  and  boomed  out 
of  the  open  windows  into  the  street  below  like  the  dis- 
charge of  artillery.  In  some  respects  the  scenic  effect 
resulting  from  important  army  news  was  marked  by 
more  startling  phases  than  in  the  sharp  rise  or  fall  of  ar- 
tificial movements.  The  gloom  or  the  gladness  over  suc- 
cess or  defeat  of  the  national  flag  mingled  with  individ- 
ual passions.  Men  leaped  upon*  chairs,  waved  their 
hands,  or  clenched  their  fists ;  shrieked,  shouted ;  the 
bulls  whistled  "  Dixie,"  and  the  bears  sung  "  John 
Brown";  the  crowd  swayed  feverishly  from  door  to  door, 
and,  as  the  fury  mounted  to  white  heat,  and  the  tide  of 
gold  fluctuated  up  and  down  in  rapid  sequence,  brokers 
seemed  animated  with  the  impulses  of  demons,  hand-to- 
hand  combats  took  place,  and  bystanders,  peering  through 
the  smoke  and  dust,  could  liken  the  wild  turmoil  only 
to  the  revels  of  maniacs.  The  anecdotes  afloat  regard- 
ing gold  brokers  and  operators  all  have  a  ring  of  Baden 
Baden  in  them.  The  dial,  marking  the  changing  price 
of  bullion,  which  overhung  the  street  when  the  Board 
met  in  Gilpin's  Eeading  Eoom,  and  which  more  recently 
has  told  its  changing  story  to  the  motley  crowds  of  New- 
Street,  always  had  its  little  band  of  worshippers  who 


242  MEN  AND   MYSTERIES   OF  WALL   STREET. 

watched  the  varying  figures  and  bet  their  dollars  on  the 
next  quotation.  The  fury  within  changed  into  curious 
comedy  without.  The  men  who  live  upon  each  other, 
and  adorn  Broadway  on  bright  afternoons  by  the  gor- 
geousness  of  their  waistcoats  and  the  flashing  of  their 
jewelry,  never  failed  to  get  quick  wind  of  whatever  sport 
was  going  on  "down  in  the  street."  One  could  safely 
gauge  the  degrees  of  slaughter  by  the  number  of  these 
birds  of  ill  omen,  but  of  festive  plumage,  who  haunted 
the  sidewalk,  and  wagered  "  fifty  to  three  "  that  the  next 
show  of  figures  would  be  a  f  difference,  or  "  one  hun- 
dred even  that  it  will  be  down  a  fraction,"  or  "  six  cents 
to  cocktails  for  four"  that  there  would  be  a  bid  three 
per  cent  higher  in  five  minutes.  There  was  a  queer 

street  man,  named  T— ,  whose  line  was  mainly  stocks, 

but  who  had  a  penchant  for  betting  on  the  register. 
When  the  luck  was  all  against  him,  and  his  exchequer 
was  low,  he  would  wait  till  the  brokers  came  out  in  the 
afternoon,  and  shout  to  his  friends,  "  Say,  boys,  let 's  go 
over  to  my  place  and  have  a  little  cock-fight ! "  Fre- 
quently the  gayer  men  would  fall  in  with  the  humor  of 
the  thing  and  make  up  a  party  to  visit  his  den.  The 

birds  were  game.     T knew  all   their  points,  and 

generally  managed  to  pick  up  enough  out  of  two  or  three 
tournaments  to  venture  anew  into  the  troubled  waters 
of  buyer  3  and  Eegular.  On  black  Friday  the  throng  in 
New  Street,  largely  swollen  by  the  listless  "  lookers-on 
in  Vienna,"  had  its  due  complement  of  veteran  register 
gamblers,  and  the  spirit  of  the  scene  was  enhanced  by  a 
dim  consciousness  that  this  was  to  be  the  last  great  field- 


IN   THE   GOLD   ROOM.  243 

day.  The  jokes,  the  merry  reminiscences  of  bygone  glo- 
ries, the  laughter  over  extravagances  in  bettings,  the 
shrewd  prescience  of  some  who  wagered  on  160,  and  the 
reckless  waste  of  fractional  currency  on  the  part  of  others 
of  the  bear  side,  who  sought  to  forget  their  greater  stakes 
on  the  day's  fortune  by  curbstone  episodes,  —  these 
were  a  dramatic  feature  in  that  large  tragedy  which  gave 
it  a  Shakespearian  roundness.  The  epoch  of  the  sidewalk 
gamblers  is  over.  The  old  excitements  have  vanished. 
The  men  who  gloated  over  the  frenzied  alternations  be- 
tween 170  and  280,  and  who  reappeared  with  something 
of  the  bygone  animation  in  the  hour  when  the  metal 
fluttered  betwixt  160  and  133,  have  lost  their  interest  in 
the  game.  And  whatever  the  future  may  disclose  of 
storm  or  struggle  in  the  downward  slide  to  specie  pay- 
ments will  limit  itself  to  the  confines  of  the  Gold  Koom 
and  the  secret  counsels  of  our  great  importers.  The 
worth  of  bullion  will  hereafter  be  a  financial  rather 
than  a  speculative  problem. 


244  MEN  AND   MYSTEKIES   OF   WALL  STKEET. 


CHAPTEE  XIII. 

THE  GOLD-BROKERS. 

WHEN  the  banks  of  the  Union  refused  to  honor 
their  own  bills  by  payment  in  coin  for  the  full 
face  value,  gold  tremulously  vibrated  in  small  percent- 
ages for  months  before  it  began  that  succession  of  im- 
mense leaps  which  grew  out  of  the  first  reverses  of  the 
war.  On  Saturday,  April  18, 1862,  it  was  at  101| ;  July 
1  it  was  108f  ;  July  21  it  stood  at  120.  The  disastrous 
campaign  of  the  Peninsula  had  borne  fruit !  The  houses 
in  foreign  trade  who  had  bills  for  one  hundred  thousand 
dollars  maturing  found  that  it  would  require  twenty 
thousand  more  to  make  their  contracts  good.  It  was 
their  first  contact  face  to  face  with  the  luxury  of  rebellion. 
New  York,  neither  in  its  commerce  nor  its  speculation, 
looked  kindly  upon  the  appreciation  of  bullion.  At  the 
Stock  Exchange  the  bears  were  in  scores  and  the  bulls  in 
half-dozens.  It  was  the  gentlemanly  thing  to  sell  gold, 
and  the  stock  operators  chose  to  be  gentlemen. 

On  William  Street,  a  few  paces  from  the  rooms  »ccii- 
pied  by  the  Eegular  Board,  is  a  basement  floor,  now 
radiant  with  the  brass-mounted  counters  of  a  flourish- 
ipg  lager-beer  restaurant.  In  1862,  however,  it  was  a 
dark  and  sombre  cellar,  so  gloomy  and  forbidding  in 
exterior  and  interior  that  its  familiar  -title  was  the  "  Coal 


THE   GOLD-BROKERS.  245 

Hole."  *  Its  frequenters  were  mainly  curbstone  brokers  ; 
and  the  business  of  speculating  in  railway  stocks,  to 
which  it  was  set  apart,  was  conducted  with  a  total 
absence  of  decorum,  and  a  freedom  from  all  those  re-- 
straints  of  daily  call  which  the  Long  Eoom  of  the 
present  day  exhibits.  Here  the  bulls  in  gold  found 
refuge.  By  December  4  they  had  tossed  it  up  to  134 ; 
on  January  31  of  the  next  year  they  bought  it  at  160. 
These  startling  changes  in  price  had  an  effect  upon 
the  outside  public.  Customers  became  numerous.  Gold 
brokerage  assumed  a  distinctive  feature  in  the  market. 
Speculation,  which  had  found  an  incentive  in  the  sudden 
appreciation  in  stocks,  was  intensified  by  this  new  and 
fascinating  game.  The  gambling  instinct  penetrated  to 
the  national  capital,  and  soon  made  that  the  point 
d'appui  for  all  operations.  The  Washington  Party, 
as  it  was  styled,  held  the  keys  to  the  gold  citadel. 
Members  of  both  Houses,  and  of  all  political  creeds, 
resident  bankers,  the  lobby  agents,  clerks,  and  secre- 
taries, haunted  the  War  Department  for  the  latest  news 
from  the  seat  of  war.  The  daily  registry  of  the  Gold 
Eoom  was  a  quicker  messenger  of  successes  or  defeats 
than  the  tardier  telegrams  of  the  Associated  Press.  A 
private  secretary  of  a  high  official,  with  no  capital  at  all 
save  his  position,  which  gave  him  authentic  information 
of  every  shaping  of  the  chess-game  of  war  full  twenty 
hours  in  advance  of  the  public,  simply  flashed  the  words 
"  sell,"  "  buy,"  across  the  wires,  and  trusted  to  the  honor 

*  This  title  was  first  given  it  by  Mr.  Henry  A.  Bowen,  who  was  then 
the  financial  editor  on  a  leading  paper. 


246  MEN  AND   MYSTERIES   OF   WALL   STREET. 

of  his  broker  for  the  rest.  He  never  knew  what  he  was 
worth  till  one  day,  with  a  week's  vacation  on  his  hands, 
he  jumped  into  the  cars,  and,  entering  the  office  of  his 
agent,  saw  a  credit  of  $  280,000  on  the  books.  By  Jan- 
uary, 1863,  the  Washington  speculators  were  at  the  high- 
tide  of  their  winnings.  They  extended  their  operations 
to  stocks,  included  merchandise  in  their  grasp,  bought 
exchange  largely.  The  brokers  in  their  employ  became 
marked  men ;  and  operators  went  long  or  short,  accord- 
ing to  the  complexion  of  the  dealings  of  these  favorites 
of  fortune. 

In  February,  1863,  Congress  attempted  to  put  a  curb 
upon  the  gold  gamblers.  It  was  made  penal  to  offer 
loans  on  bullion  above  par.  Other  fribbling  difficulties 
were  thrown  in  the  way  of  traffic  in  coin;  but  the 
quotations  were  in  no  wise  seriously  affected.  Gold 
fell  and  rose  between  172  and  145  until  July.  The 
capture  of  Fort  "Wagner,  and  the  strong  belief  that 
Charleston  would  fall  into  the  hands  of  the  Union,  were 
the  first  vital  blows  to  the  Washington  clique  and  their 
New  York  coadjutors.  The  precious  metal  reached 
122|  before  it  rebounded.  Foreign  Exchange  sharply 
declined,  Merchants  saw  their  stocks  of  goods  daily 
lessening  in  value,  and  in  despair  sold  bales  on  bales 
in  the  auction-room. 

The  autumn  trade  opened  more  brightly.  The  Pe- 
troleum mania  assisted  in  the  recovery  of  the  mar- 
ket. Stocks  of  all  kinds  sold  high,  and  were  manipu- 
lated without  regard  to  dividends,  permanent  value, 
or  aught  else.  Gold  vibrated  between  140  and  169. 


THE   GOLD-BROKERS.  247 

The  bulls  were  seventy  out  of  a  hundred.  Between 
September,  1863,  and  April  of  the  succeeding  year  the 
speculative  fever  reached  a  height  unequalled  at  any 
previous  or  succeeding  stage  of  the  national  history. 
Many  brokers  earned  from  eight  hundred  to  ten  thou- 
sand dollars  a  day  in  commissions.  The  entire  popu- 
lation of  the  country  entered  the  field.  Offices  were 
besieged  by  crowds  of  customers.  At  least  a  hundred 
million  of  dollars  were  realized  in  sales.  New  York 
never  exhibited  such  wide-spread  evidences  of  pros- 
perity. Broadway  was  lined  with  carriages.  The  fash- 
ionable milliners,  dressmakers,  and  jewellers  reaped 
golden  harvests.  The  pageant  of  Fifth  Avenue  on  Sun- 
day, and  of  Central  Park  during  week-days,  was  bizarre, 
gorgeous,  wonderful!  Never  were  such  dinners,  such 
receptions,  such  balls.  Anonyma  startled  the  city  with 
the  splendor  of  her  robes  and  the  luxury  of  her  equi- 
pages. Vanity  Fair  was  no  longer  a  dream. 

In  other  chapters  we  shall  glance  at  the  speculative 
career  of  the  country  from  the  first  stock  market  to  the 
beginning  of  the  war.  But  the  story  of  Wall  Street 
during  the  Eebellion  can  best  be  understood  from  the 
stand-point  of  the  gold-broker.  It  was  the  fluctuating 
character  of  bullion  which  caused  the  two  great  panics  of 
the  period.  It  was  the  lock-up  of  greenbacks  —  coin 
paper  momentarily  taking  the  place  of  coin  metal  — 
which  led  to  another  intermediate  and  less  important 
flurry.  1864, 1868, 1869,  can  best  be  comprehended  from 
the  outlook  of  the  Gold  Eoom.  Early  in  April,  1864, 
Secretary  Chase  visited  New  York.  Determined  to  put  a 


248  MEN  AND   MYSTERIES   OF  WALL  STREET. 

check  upon  what  he  was  not  alone  in  deeming  a  national 
disaster,  he  dashed  aside  the  law  requiring  the  creation 
of  a  sinking-fund  for  the  redemption  of  the  national 
debt,  and  the  rule  whereby  custom  dues  are  made  pay- 
able in  coin.  It  was  announced  that  paper  would  be 
received  at  the  rate  of  165  cents  to  the  gold  dollar,  and 
that  every  morning  the  Sub-Treasury  would  designate 
the  rate  at  which  government  was  prepared  to  sell  specie 
for  the  day.  On  Saturday,  April  16,  gold  opened  at 
189  in  private  sales ;  but  the  news  of  the  resolution  of 
the  Secretary  of  the  Treasury  presently  swept  over  the 
street  like  a  tornado.  By  night  the  metal  had  fallen  to 
175.  All  day  Sunday  the  city  was  in  a  tremor  of  excite- 
ment, and  on  the  first  day  of  the  secular  week  men  hur- 
ried to  William  Street  hours  before  the  usual  time.  The 
bulls  fought  against  hope,  but  with  tenacity.  170£, 
170J-f-|,  up  and  down  through  the  fractions,  with  res- 
olute determination  to  keep  the  price  above  170  if  pos- 
sible. At  last  the  bears  had  hammered  it  down  to  the 
fatal  point.  A  despairing  bull  bought  $  50,000  in  order 
to  check  the  decline,  when  suddenly  one  hundred  thou- 
sand was  offered  at  168,  and  no  one  ventured  to  take  it. 
The  market  was  broken.  The  brokers  forsook  the  Gold 
Eoom  and  retired  to  their  offices.  At  the  Stock  Ex- 
change all  was  confusion.  Ten  days  before  Fort  Wayne 
had  dropped  from  152|  to  135  ;  it  now  fell  to  83.  Bead- 
ing, which  had  seen  160,  was  flat  at  111.  Panama 
reeled  to  200.  Northwest  touched  24.  All  along  the 
line  stocks  plunged  downward,  with  fifteen  per  cent  fall 
on  Saturday,  and  from  five  to  twenty-five  per  cent  de- 


THE   GOLD-BROKERS.  249 

pression  on  Monday.  Morse  &  Co.,  a  heavy  house  whose 
operations  in  Fort  Wayne  and  Rock  Island  were  on  a 
vast  scale,  announced  their  suspension  at  the  close  of  the 
first  call.  Sam  Hallett  followed.  Smaller  firms  broke  by 
dozens.  Outside  operators  who  had  made  rapid  and 
excessive  fortunes  were  ruined  in  a  day.  Brokers'  offices 
were  filled  with  customers  whose  margins  had  been 
swept  away,  or  whose  stock  had  been  ruthlessly  slaugh- 
tered. One  man,  just  married,  whose  capital  of  $  30,000 
had  been  risked  and  lost  in  a  single  bold  venture,  sat  in 
his  dealer's  room  through  the  long  hours  of  Monday, 
unmindful  of  the  busy  stir  around  him,  his  teeth  set  as 
if  in  death,  his  eyes  transfixed,  his  face  like  a  winding- 
sheet,  and  nothing  to  indicate  that  his  heart  still  con- 
tinued to  beat  save 'the  cold  beads  of  perspiration  on  his 
pallid  forehead.  Actors  and  actresses  who  had  invested 
their  earnings  lucklessly  were  there.  Professional  men 
came  in  shoals.  Eough -handed  and  ill-humored  coun- 
trymen burst  into  the  privacy  of  inside  rooms,  and 
demanded  instant  return  of  their  deposits.  Through- 
out the  week  "Wall,  Broad,  and  William  Streets  were 
the  scene  of  whatever  is  tragical  and  terrible  in  specu- 
lation. 

On  Tuesday,  Wednesday,  and  Thursday  the  bears  had 
the  field  to  themselves  in  both  markets.  On  Friday, 
however,  confidence  gradually  restored  itself.  The  capi- 
talists who  had  foreseen  the  great  break  in  stocks  and 
had  temporarily  retired,  now  returned  and  bought  heavily. 
The  gold-operators  renewed  their  attack,  and  compelled 
the  Sub-Treasury  to  vary  its  rates  to  suit  their  own 
11* 


250  MEN  AND   MYSTERIES  OF  WALL   STEEET. 

schemes.  By  Monday  the  25th  government  discovered 
that  it  could  not  longer  dispense  with  coin  for  custom 
dues,  and  gold  jumped  instantly  to  182.  Thwarted  in 
his  efforts,  the  Secretary  now  used  his  influence  to  se- 
cure the  passage  of  the  Gold  Bill  through  Congress.  The 
act  came  into  effect  June  21st.  The  Gold  Eoom  was  at 
once  closed,  and  the  Stock  Exchange  expunged  the  pre- 
cious metal  from  the  daily  call.  On  July  4th  the  act 
was  repealed,  as  its  only  consequence  had  been  to  em- 
barrass the  commercial  class,  causing  a  rise  in  exchange 
and  an  increase  from  210  to  250  in  the  rates  of  private 
sale.  Upon  the  morning  succeeding  the  national  holi- 
day the  Gold  Eoom  opened  anew.  The  next  seven  days 
the  chamber  rocked  with  the  struggles  of  the  bears,  now 
caught  in  a  vast  network  which  the  bull  leaders  had 
been  weaving  during  the  interval  of  the  Gold  Bill.  On 
July  llth  gold  reached  its  highest  quotation,  selling  at 
nightfall  for  285.  War  had  nothing  to  do  with  that  ex- 
cessive price.  It  was  simply  the  culmination  of  a  well- 
concerted  corner.  Even  these  figures,  which  will  prob- 
ably go  down  into  history  as  the  extreme  point  reached 
in  gold  sales,  were  really  below  the  prices  paid  at  the 
Eoom  after  the  regular  adjournment.  One  transaction 
at  least  on  that  day  was  for  289J.  And  a  lot  of  gold 
amounting  to  $  100,000  was  bought  at  the  extraordinary 
rate  of  310 !  The  purchaser  was  William  Limerick,  a 
banker  of  Lexington,  Missouri,  who  happened  to  be  in 
the  city  at  the  moment,  and,  believing  that  the  country- 
was  on  the  edge  of  immense  and  irretrievable  ruin,  gave 
a  peremptory  order  to  his  brokers  to  buy  just  as  the  cor- 


THE   GOLD-BROKERS.  251 

nering  clique  had  given  a  final  twist  to  the  shorts  by  a 
sharp  upward  rise  in  the  asking  price.  The  bullion  was 
placed  in  the  hands  of  Wm.  H.  Pomeroy  with  an  in- 
junction to  keep  it  in  his  safe  till  called  for,  and  Limer- 
ick retired  for  the  night  with  the  proud  consciousness 
that,  whatever  might  betide  the  nation,  he  had  something 
secure  for  his  old  age. 

Heretofore  the  gold-brokers  had  had  no  regular  gov- 
ernment. From  the  Coal  Hole  they  had  moved  to  Gil- 
pin's  News  -Eoom,  corner  of  William  Street  and  Ex- 
change Place,  where  any  one  could  be  admitted  on 
payment  of  $  25  a  year.  It  was  in  this  room  that  the 
great  corner  of  July  llth  had  been  brought  to  successful 
conclusion.  A  few  months  later  a  number  of  the  better 
class  of  operators  and  dealers  came  together,  and  prelim- 
inary steps  were  taken  for  a  definite  organization.  On 
the  14th  of  October  this  action  bore  fruit.  A  constitu- 
tion and  by-laws  were  approved  and  accepted,  three  hun- 
dred members  paid  in  their  subscriptions,  and  the  new 
Gold  Board  proceeded  to  the  election  of  its  officers. 
Henry  M.  Bendict  was  chosen  President,  Thos.  P.  Akers 
and  E.  H.  Foote  were  made  First  and  Second  Vice-Presi- 
dents,  J.  W.  Moses  was  elected  Secretary,  and  Theodore 
Gentil  Treasurer.  The  new  body  shortly  after  took  up 
its  quarters  in  the  rooms  of  the  old  Stock  Board  at  24 
Beaver  Street. 

The  ensuing  season  was  signalized  by  a  fresh  acces- 
sion to  the  speculative  excitement.  New  operators  came 
into  the  field,  and  old  leaders  greatly  extended  the 
dimensions  of  their  transactions.  Wm.  L.  Hoblitzel, 


252  MEN  AND   MYSTERIES   OF  WALL   STEEET. 

a  dashing  and  shrewd  broker,  had  given  the  keynote  to 
the  campaign  by  selling  a  million  short  in  one  block. 
The  gold  gamblers  were  startled.  No  transaction  of  such 
huge  calibre  had  as  yet  occurred.  The  sale  was  in  Sep- 
tember, and  bullion  fell  at  once  to  200.  Hoblitzel  cov- 
ered with  immense  profit,  and  the  street  was  not  slow 
in  following  up  the  novel  example.  Dr.  Shelton  sold 
$  6,000,000  in  successive  strokes,  and  bought  in  -at  a 
figure  which  afforded  a  brilliant  fortune.  E.  A.  Corey 
was  another  operator  of  the  time,  whose  dealings  were 
as  vast  as  successful.  He  was  invariably  a  bear,  and 
seldom  missed  his  mark.  Light-haired  S.  T.  Suit,  a 
thriving  Kentucky  whiskey-distiller  in  early  days,  had 
recently  entered  the  street  and  speculated  as  bull,  buy- 
ing a  sum-total  of  $  10,000,000  up  to  the  moment  that 
Hoblitzel  hammered  gold  down  to  200,  when  he  went 
into  short  transactions,  minting  money  by  the  way. 
John"  M.  Tobin  and  Charles  Kearney  also  shone,  buying 
and  selling  in  lots  of  from  one  hundred  thousand  to  a 
million.  The  former  shortly  after  the  capture  of  Atlanta 
bought  several  millions  at  198-201,  and  sold  a  lot  for 
221  with  consequent  heavy  realizations.  It  would  be 
easy  to  fill  many  pages  with  these  records  of  gains, 
darkened  by  occasional  losses.  In  early  spring  Limer- 
ick reappears.  He  had  been  buying  and  buying  as  his 
resources  would  allow,  and  sending  his  gold  to  Canada 
from  an  almost  insane  doubt  of  the  continuance  of  pros- 
perity in  the  Union.  The  one  hundred  thousand  which 
he  had  purchased  at  310  was  clung  to  pertinaciously 
until  its  owner  was  compelled  to  realize.  It  was  then 


THE   GOLD-BROKERS.  253 

sold  on  March  14,  '65,  for  185 !  Shortly  after  Limer- 
ick partly  retrieved  his  reverse  by  selling  at  175,  and 
covering  at  144.  One  of  the  extraordinary  features  of 
the  gold  market  at  this  period  was  the  great  alterna- 
tions of  price  within  the  limits  of  single  days.  Thus 
July  12th  gold  was  sold  for  271  and  282.  July  19th  the 
range  was  258-268;  August  29th,  235-245;  September 
10th,  218  -  228J.  The  next  Monday  it  sold  for  213 \  and 
225.  On  Tuesday  it  was  217|- 228.  On  the  24th  the 
difference  in  the  day's  price  was  twelve  per  cent.  No- 
vember 2d  it  vacillated  seventeen  per  cent.  On  the 
9th  it  changed  from  246  to  260.  Changes  of  five,  six, 
seven,  and  eight  per  cent  were  common. 

During  the  winter  and  spring  of  1864-65  the  days 
were  too  short  for  the  fervid  haste  of  the  speculators. 
The  corridors  of  the  Fifth  Avenue  Hotel  were  crowded 
nightly  by  eager  throngs,  and  the  barter  in  stocks  and 
gold  went  on  with  almost  the  same  intensity  which 
characterized  the  down-town  boards.  A  Mr.  Gallagher 
saw  his  opportunity  for  coining  money  out  of  this  un- 
natural fever,  and  opened  an  evening  exchange  in  a 
room  back  of  the  hotel,  where  the  Fifth  Avenue  Theatre 
now  stands.  Eailways,  petroleum  stocks,  and  gold  were 
sold  at  different  hours  of  the  night.  He  had  previously 
established  an  outside  Petroleum  Board  at  the  corner  of 
Broadway  and  23d  Street,  and  ultimately  the  evening 
exchange  transferred  its  quarters  to  the  same  spot.  A 
blood-red  transparency,  announcing  this  strange  anomaly 
of  the  century,  glared  out  upon  the  great  pleasure  street 
of  New  York  immediately  after  dusk,  and  until  mid- 


254  MEN   AND   MYSTERIES   OF  WALL   STREET. 

night  the  murmur  of  voices  rolled  out  upon  the  side- 
walk. The  street  hecame  demoralized.  Brokers  appar- 
ently lived  without  sleep  or  rest  or  peace.  They 
haunted  the  day  boards  with  pallid  faces  and  a  strange 
glitter  of  the  eye.  High-strung,  fevered  in  blood, 
craving  excitement  from  the  very  exhaustion  of  over- 
work, they  carried  in  their  faces  a  prophecy  of  evil. 
In  August  the  evil  came.  Jenkins,  cashier  of  the 
Phoenix  Bank,  defaulted  for  $  300,000,  lost  in  gold  and 
stocks,  or  spent  in  the  mad  debaucheries  of  the  year. 
Close  upon  this  came  the  failure  of  P.  E.  Mumford,  an 
operator  with  an  office  at  42  Exchange  Place.  On  the 
12th  he  had  bought  $  150,000  in  gold  and  paid  for  it 
when  delivered  by  checks  on  a  bank  where  he  had  no 
deposit.  Seven  brokers  suffered  from  this  default,  and 
the  Christian  world  was  scandalized  by  the  fact  that 
Mumford  was  a  trustee  of  a  church  at  Flushing,  Long 
Island.  These  "  irregularities  "  were  prelusive  of  far 
more  terrible  revelations.  Upon  the  14th  of  the  same 
month  Edward  Ketchum  absconded,  leaving  behind  him 
a  bequest  to  the  street  in  the  shape  of  a  million  and  a 
half  of  forged  gold  certificates.  The  failure  of  the  house 
of  which  he  was  second  partner  followed  immediately, 
and  out  of  the  smoke  of  the  ruin  emerged  the  amazing 
rumor  that  two  millions  and  a  half  of  State  securities 
had  been  stolen  from  the  firm.  In  a  vain  attempt  to 
stem  the  tide,  Ketchum,  Son,  &  Co.  had  gathered  up 
some  200,000  shares  held  on  margin  or  contract,  and  sold 
them  upon  a  falling*  market  at  Gallagher's  Exchange  and 
at  the  first  call  of  the  regular  Board  on  the  succeeding 


THE   GOLD-BROKERS.  255 

day.  Stocks  dropped  from  three  to  eight  per  cent,  gold 
fell  in  proportion,  and  the  days  of  '64  seemed  on  the 
point  of  returning.  Sensational  rumors  were  spread 
over  the  country  by  telegraph.  It  was  whispered  that 
D.  Groesbeck  &  Co.  were  seriously  involved,  and  the 
house  was  compelled  to  publish  a  letter  from  the  Presi- 
dent of  the  Union  Bank  stating  that  they  had  then  on 
deposit  $  1,173,554.  A  prominent  house  issued  a  panic- 
stricken  circular,  announcing  that  thenceforward  they 
should  greatly  restrict  the  extent  of  individual  loans  on 
collaterals,  and  that  customers  must  accompany  their 
orders  with  enhanced  margins.  Money  grew  exasper- 
atingly  tight.  The  banks  refused  to  discount.  Brokers 
slaughtered  their  customers'  stocks  without  warning. 
As  usual,  also,  the  big  leviathans  of  speculation  came 
sailing  into  the  market  at  its  low  ebb  and  bought 
heavily  only  to  sell  again  a  week  after  or  as  soon  as  the 
tempest  had  spent  its  force.  The  bears  reaped  millions 
by  their  opportune  courage. 

When  the  street  had  somewhat  recovered  its  tone,  a 
simultaneous  attack  was  commenced  upon  the  Evening 
Board.  The  banks  of  the  city  compelled  their  officers 
to  sign  an  agreement  to  hold  no  intercourse  with  the 
men  who  frequented  the  rooms.  The  Stock  Exchange 
voted  unanimously  to  the  same  effect,  and  the  Open 
Board  adopted  a  similar  resolution  by  97  yeas  against 
17  nays.  On  August  25th  the  Gold  Board  at  its  first 
call  gave  the  last  blow  to  night-dealings  by  acceding 
to  the  general  feeling,  and  making  the  frequenting  of 
Gallagher's  rooms  a  sufficient  reason  for  the  immediate 


256  MEN  AND   MYSTEKIES   OF  WALL   STKEET. 

expulsion  of  the  offending  member.*  On  the  same  day 
the  public  was  informed  of  the  capture  of  Ketchum, 
and  fresh  light  was  thrown  upon  the  vast  proportions  of 
current  speculations  by  his  statement  that  only  a  few 
months  before  he  had  acquired  six  millions  of  dollars  by 
street  dealings,  and  that  in  the  subsequent  fall  of  gold 
from  201  to  147,  incident  to  Sherman's  successful  march 
to  the  sea,  this  had  not  only  disappeared,  but  had  in- 
volved liabilities  to  the  extent  of  four  millions,  which 
he  had  sought  to  protect  by  margins  based  upon  his 
forgeries. 

From  '65  to  '69  the  Gold  Board  was  free  from  the 
startling  paroxysms  of  the  anterior  period.  The  daily 
variations  were  seldom  more  than  two  or  three  per  cent. 
Prices  ranged  up  and  down  through  the  months  with 
singular  evenness.  Brokers  contented  themselves  with 
smaller  profits.  Slight  causes  came  in  play  to  affect 
the  market.  Government  was  a  powerful  disturbing 
force.  One  Friday  McCulloch  employed  three  or  four 
agents  to  sell  six  millions,  seller  3.  The  buyers  antici- 
pated that  the  contracts  would  go  over  till  Monday, 
when  they  were  taken  aback  sharply  by  a  demand  for 
immediate  payments.  The  market  broke  at  once.  Fre- 
quent raids  of  this  kind  incensed  the  street.  On  the 

*  The  Gold  Room  was  now  in  New  Street,  where  it  has  since  remained. 
The  apartments  had  been  leased  the  1st  of  May,  1865,  but  were  not 
occupied  till  August,  as  extensive  repairs  were  found  necessary.  The 
terms  of  lease  had  a  curious  clause.  For  five  years  the  rent  was  to  be 
$25,000  annually.  After  1870,  and  until  1875,  it  was  to  be  reduced  to 
$16,000.  The  lessors  evidently  supposed  that  by  the  present  year  the 
Gold  Room  would  be  a  reminiscence. 


THE   GOLD-BROKERS.  257 

reception  of  the  news  of  the  London  Panic  of  '66,  Peter 
Myer  &  Co.  received  orders  from  Washington  to  sell 
all  the  gold  the  street  would  take  at  130,  to  steady  the 
market.  The  price  of  bullion  was  considerably  above 
this  figure,  and  when  the  government  broker  went  down- 
on  the  pavement  before  the  Stock  Exchange  at  4  p.  M. 
to  make  the  sales,  dealers  fought  with  each  other  for 
the  privilege  of  purchase.  At  least  thirty  millions  were 
sold  off  within  little  more  than  a  half-hour.  The  next 
day  ten  millions  additional  were  put  into  the  market. 
This  action  of  McCulloch  unquestionably  saved  the 
Bank  of  England  from  suspension  and  Great  Britain 
from  an  unprecedented  financial  revolution.  Indeed, 
some  of  the  ablest  bankers  of  Wall  Street  are  of  the 
opinion  that,  if  government  had  not  interfered  at  this 
crisis,  New  York,  in  less  than  six  months,  would  have 
been  the  principal  financial  city  of  the  world.  The 
forced  and  sudden  cheapness  of  the  precious  metal 
made  it  the  most  profitable  of  exports.  The  bullion, 
when  sent  to  London,  was  exchanged  for  American  pro- 
ducts, then  selling  at  panic  prices,  and  vast  realizations 
were  made  by  trans-shipping  the  wheat,  cotton,  lard, 
and  other  articles  of  commerce  which  had  been  exported 
from  the  United  States  during  the  spring.  5-20s  were 
bought  in  large  quantities  with  from  fifteen  to  twenty 
per  cent  profit.  It  is  a  curious  commentary  upon  the 
rapidity  with  which  the  British  market  recovered  through 
the  interposition  of  Mr.  McCulloch,  that  some  lots  of 
government  bonds  bought  at  this  time  in  London 
reached  New  York  too  late  for  profiting  by  the  home 


258  MEN  AND   MYSTERIES   OF  WALL   STREET. 

market,  and  were  consequently  reshipped  by  the  next 
steamer  for  England. 

The  Gold  Board  after  this  brief  flurry  lapsed  into  a 
certain  degree  of  quiet  Bullion  rose  and  fell  in  easy 
•flights.  The  fall  of  American  securities  abroad,  fears 
of  Prussian  or  Oriental  complications,  heavy  ship- 
ments of  gold,  the  rumor  of  the  fatal  illness  of  Na- 
poleon, have  all  had  their  effect  in  influencing  price. 
Merchants  and  foreign  bankers  go  into  the  market  not 
infrequently  to  buy,  and,  if  rates  are  unsatisfactory,  imi- 
tate the  methods  of  the  brokers,  by  borrowing.  Oc- 
casionally houses  are  caught  inextricably.  Not  many 
months  ago  a  broker,  on  failing  for  four  millions  and  a 
half,  disclosed  his  principals,  who  proved  to  be  a  promi- 
nent firm  in  the  Eio  Janeiro  trade. 

The  star  of  Erie  during  the  last  four  years  has 
dimmed  the  radiance  of  the  Gold  Eoom.  In  '66  Daniel 
Drew  achieved  his  grandest  victory  in  that  volatile  se- 
curity, tossing  the  stock  up  and  down  from  50  to  90, 
and  making  two  fortunes  out  of  the  campaign.  Twenty- 
four  months  later  the  purses  of  the  street  were  twice 
wrung  dry  by  the  same  skilful  manipulator,  assisted, 
or  rather  overshadowed,  by  the  impulsive  and  wonderful 
operatic  impressario  Fisk.  The  instrument  of  torture 
was  the  "  lock-up."  Its  method  is  simple.  The  firm  of 
Fisk  &  Belden  deposited  on  March  8th  and  9th  the  sum 
of  $3,625,000  in  the  Tenth  National  Bank,  receiving 
certified  checks  therefor.  Two  days  after  David  Groes- 
beck  &  Co.  sent  these  checks  to  a  bank  as  a  special 
deposit.  Meanwhile  Mr.  Drew,  by  sales  of  Erie,  accu- 


THE   GOLD-BROKERS.  259 

mulated  $5,000,000,  which  he  carried  immediately  to 
Jersey  City.  Thus  twelve  millions  were  suddenly  taken 
from  the  market.  No  financial  centre  can  bear  such  a 
strain  without  sensible  disturbance.  Loans  went  up  to 
one  per  cent  a  day.  Stocks  fell  with  a  crash.  At  the  end 
of  October  the  operation  was  renewed.  By  deposits  of 
greenbacks,  by  certifications  of  certifications,  collusion 
on  the  part  of  bank  directors,  and  limitless  audacity  on 
the  part  of  the  Erie  clique,  some  twelve  or  fourteen  mil- 
lion dollars  were  peremptorily  "retired"  from  employ- 
ment in  the  market  at  precisely  that  point  of  the  year 
when  the  necessities  of  trade  make  heavy  drafts  upon  the 
resources  of  the  banks.  The  effect  was  unexampled.  The 
city  saw  a  week  of  unabated  and  hourly  augmenting 
agony.  Gold,  which  had  adapted  itself  to  trivial  varia- 
tions of  an  eighth  or  a  quarter,  showed  two  per  cent 
depreciation.  But  in  stocks  the  effect,  as  instantaneous 
as  in  the  precious  metal,  was  far  more  marked  in  its 
final  results.  St.  Paul  fell  42  per  cent ;  Hudson  dropped 
15  per  cent;  Northwest,  19  per  cent;  Chicago  and 
Alton,  15.  Fort  Wayne  and  New  York  Central  both 
broke,  —  the  former  from  114£  to  104f,  the  latter 
from  126 §  to  117|.  It  is  estimated  that  the  two  lock- 
ups produced  a  depreciation  of  at  least  twenty  per  cent 
in  railway  property,  over  the  country,  or,  stated  in  sum- 
totals,  not  less  than  two  hundred  millions  of  dollars  ! 

The  Gold  Board  had  been  comparatively  untouched  by 
this  upheaval.  Half  its  members  also  hold  seats  at  the 
Stock  Exchange,  and  the  complications  necessarily  af- 
fected them  seriously.  But  in  purely  gold  transactions 


260  MEN  AND   MYSTEEIES    OF  WALL   STREET. 

the  consequences  of  the  clique  movements  were  in- 
considerable. All  through  the  fall  and  ensuing  spring 
and  summer  gold  slid  up  and  down  the  grooves  in  slight 
changes,  with  fractional  profits  to  those  who  followed 
the  market  with  shrewdness.  But  none  of  the  old 
spirit  of  the  war  remained  with  the  gold-dealers,  and 
for  sharp  and  sudden  vacillations  of  price  they  were 
compelled  to  pass  from  the  New  Street  Board  to  the 
Long  Room.  Early  in  September,  1869,  however,  the 
atmosphere  began  to  exhibit  signs  of  an  approaching 
tempest.  It  was  noticed  that  the  clearances  of  the 
Gold  Exchange  Bank  were  increasing  in  magnitude. 
The  biddings  at  the  Board  grew  more  lively,  and  the 
evidences  of  a  vast  clique  movement  were  plainly  per- 
ceptible. Although  the  ostensible  brokers  of  the  league 
invariably  sold,  it  was  not  difficult  to  discover  that  the 
balances  of  purchases,  from  whatever  cause  they  might 
be  due,  were  greatly  in  excess  of  sales.  Nevertheless, 
the  vast  proportion  of  operators  took  the  bear  side.  It 
seemed  preposterous  that  there  should  be  any  marked 
change  in  gold  values.  A  corner  in  the  precious  metal 
has  been  proved  more  than  once  to  be  feasible,  but  the 
traditions  of  the  street  are  against  it.  For  one  success 
there  have  been  ten  failures.  Nor  is  it  necessary  to  go 
far  for  an  explanation.  In  stocks  one  may  buy  up 
double  or  treble  the  capital  stock,  or  double  and  treble 
the  amount  held  by  the  street  or  within  the  circuit  of 
bonajide.  delivery.  But  gold  is  like  the  air.  London  or 
Frankfort  or  San  Francisco  can  transfer  millions  upon 
millions  by  flash  of  telegraph.  The  immense  ocean  of 


THE   GOLD-BROKERS.  261 

the  Sub-Treasury  may  overflow.  All  the  small  sums  of 
gold  scattered  throughout  the  banks  of  the  United  States 
may  be  tributary.  The  task  of  withdrawing  and  corner- 
ing coin  would  therefore  appear  comparable  to  the  pump- 
ing gut  of  the  New  York  Bay  by  a  grand  combination 
of  steam-engines.  To  the  just  scepticism  with  which 
the  rumor  of  an  impending  conflict  was  received  there 
was  added  a  firm  belief  that  the  era  of  specie  payments 
was  not  far  distant,  and  the  proposition  for  consolidating 
the  national  debt,  with  a  corresponding  steadiness  of 
governments  in  the  European  money-markets,  aided 
materially  this  conviction.  It  followed  that,  although 
during  the  three  previous  years  gold  had  invariably 
mounted  the  register  with  the  approach  of  harvest,  the 
short  interest  of  '69  was  very  great.  Common  belief 
estimates  the  sales  for  future  delivery  on  the  part  of 
brokers  and  their  customers  at  this  time  at  an  amount 
not  less  than  fifty  millions,  one  fourth  of  which  was  in 
the  hands  of  three  men. 

On  the  22d  of  September  gold  stood  at  137£  when 
Trinity  bells  rung  out  the  hour  of  twelve.  By  two  it  was 
at  139.  Before  night  its  lowest  quotation  was  141.  This 
ascent,  regular,  unfluctuating,  and  evidently  predeter- 
mined, carried  the  more  alarm  by  the  very  extent  of  the 
rise.  In  the  old  Eebellion  days  a  ten-per-cent  increase 
in  eight  hours  was  an  affair  of  no  moment  whatever.  It 
happened  every  week,  sometimes  twice  and  thrice  a 
week.  But  since  the  sharp  vibrations  of  June  16  and 
18,  1866,  when  gold  rose  and  fell  from  154  to  160, 
and  again  from  133  to  167|,  the  utmost  daily-  range 


262  MEN   AND    MYSTERIES   OF  WALL   STREET. 

had  been  two  per  cent,  with  occasional  fractional  ad- 
ditions. Three  years  of  dull  monotony,  and  now  an 
advance  of  three  and  a  half  per  cent  in  five  hours  !  At 
the  same  time  the  Stock  Market  exhibited  tokens  of  ex- 
cessive febrility,  New  York  Central  dropping  twenty- 
three  per  cent  and  Harlem  thirteen.  Loans  had  become 
extremely  difficult  to  negotiate.  The  most  usurious 
prices  for  a  twenty-four  hours'  turn  were  freely  paid. 
The  storm  was  palpably  reaching  the  proportions  of  a 
tempest. 

Nevertheless,  the  brokers  on  the  bear  side  strove  man- 
fully under  their  burden.  The  character  and  purposes 
of  the  clique  were  fully  known.  "Whatever  of  mystery 
had  heretofore  enfolded  them  was  now  boldly  thrown 
aside,  and  the  men  of  Erie,  with  the  sublime  Fisk  in  the 
forefront  of  the  assailing  column,  assured  the  shorts 
that  they  could  not  settle  too  quickly,  since  it  remained 
with  the  ring,  now  holding  calls  for  one  hundred  mil- 
lions, either  to  kindly  compromise  at  150  or  to  carry 
the  metal  to  200  and  nail  it  there.  This  threat  was 
accompanied  by  consequences  in  which  the  mailed  hand 
revealed  itself  under  the  silken  glove.  The  movement 
had  intertwisted  itself  deep  into  the  affairs  of  every 
dealer  in  the  street,  and  entangled  in  its  meshes  vast 
numbers  of  outside  speculators.  In  borrowing  or  in 
margins  the  entire  capital  of  the  former  had  been  nearly 
absorbed,  while  some  five  millions  had  been  deposited 
by  the  latter  with  their  brokers  in  answer  to  repeated 
calls.  When  Thursday  morning  rose,  gold  started  at 
141  f,  and  soon  shot  up  to  144.  Then  the  clique  began 


. 

' 


THE   GOLD-BROKERS.  263 

to  tighten  the  screws.  The  shorts  received  peremptory 
orders  to  increase  their  borrowing  margins.  At  the  same 
moment  the  terms  of  loans  overnight  were  raised  be- 
yond the  pitch  of  ordinary  human  endurance.  Stories 
were  insidiously  circulated  exciting  suspicion  of  the 
integrity  of  the  Administration,  and  strengthening  the 
belief  that  the  National  Treasury  would  bring  no  help 
to  the  wounded  bears.  Whispers  of  an  impending 
lock-up  of  money  were  prevalent ;  and  the  fact,  then 
shrewdly  suspected,  and  now  known,  of  certifications  of 
checks  to  the  amount  of  twenty-five  millions  by  one 
bank  alone  on  that  day  lent  color  to  the  rumor.  Many 
brokers  lost  courage,  and  settled  instantly.  The  Gold 
Room  shook  with  the  conflict,  and  the  battle  prolonged 
itself  into  a  midnight  session  at  the  Fifth  Avenue  Hotel. 
The  din  of  the  tumult  had  penetrated  to  the  upper  cham- 
bers of  journalism.  Eeporters  were  on  the  alert.  The 
great  dailies  magnified  the  struggle,  and  the  Associated 
Press  spread  intelligence  of  the  excitement  to  remote  sec- 
tions. When  Friday  opened  clear  and  calm,  the  pavement 
of  Broad  and  New  Streets  soon  filled  up  with  unwonted 
visitors.  All  the  idle  population  of  the  city  and  its  neigh- 
borhood crowded  into  the  financial  quarter  to  witness  the 
throes  of  the  tortured  shorts.  Blended  with  the  merely 
curious  were  hundreds  of  outside  speculators  who  had 
ventured  their  all  in  the  great  stake,  and  trembled  in  doubt 
of  the  honor  of  their  dealers.  Long  before  9  A.  M.  these 
men,  intensely  interested  in  the  day's  encounter,  poured 
through  the  alley- way  from  Broad  Street,  and  between 
the  narrow  walls  of  New  Street,  surging  up  around 


264  MEN  AND   MYSTERIES   OF  WALL   STREET. 

the  doorways,  and  piling  themselves  densely  and  pain- 
fully within  the  cramped  galleries  of  the  Koom  itself. 
They  had  made  good  the  fresh  calls  for  margins  up  to 
143,  the  closing  figure  of  the  night  before.  The  para- 
mount question  now  was,  How  would  gold  open  ?  They 
had  not  many  minutes  to  wait.  Pressing  up  to  the  foun- 
tain, around  which  some  fifty  brokers  had  already  con- 
gregated, a  bull  operator  with  resonant  voice  bid  145 
for  twenty  thousand.  The  shout  startled  the  galleries. 
Their  margins  were  once  more  in  jeopardy.  Would  their 
brokers  remain  firm  ?  It  was  a  terrible  moment.  The 
bears  closed  round  the  aggressors.  Yells  and  shrieks 
filled  the  air.  A  confused  and  baffling  whirl  of  sounds 
ensued,  in  which  all  sorts  of  fractional  bids  and  offers 
mingled,  till  '46  emerged  from  the  chaos.  The  crowd 
within  the  arena  increased  rapidly  in  numbers.  The 
clique  agents  became  vociferous.  Gold  steadily  pushed 
forward  in  its  perilous  upward  movement  from  '46  to  '47, 
thence  to  '49,  and,  pausing  for  a  brief  twenty  minutes, 
dashed  on  to  150|.  It  was  now  considerably  past  the 
hour  of  regular  session.  The  President  was  in  the  chair. 
The  Secretary's  pen  was  bounding  over  his  registry  book. 
The  floor  of  the  Gold  Eoom  was  covered  with  three 
hundred  agitated  dealers  and  operators,  shouting,  heaving 
in  masses  against  and  around  the  iron  railing  of  the 
fountain,  falling  back  upon  the  approaches  of  the  com- 
mittee-rooms and  the  outer  entrance,  guarded  with  rig- 
orous care  by  sturdy  door-keepers.  Many  of  the  prin- 
cipal brokers  of  the  street  were  there,  —  Kimber,  who 
had  turned  traitor  to  the  ring ;  Colgate,  the  Baptist ; 


THE   GOLD-BROKERS.  265 

Clews,  a  veteran  government  broker ;  one  of  the  Mar- 
vins  ;  James  Brown ;  Albert  Speyer,  and  dozens  of  others 
hardly  less  famous.  Every  individual  of  all  that  seeth- 
ing throng  had  a  personal  stake  beyond,  and,  in  natural 
human  estimate,  a  thousand-fold  more  dear  than  that  of 
any  outside  patron,  no  matter  how  deeply  or  ruinously 
that  patron  might  be  involved.  At  11  of  the  dial  gold 
was  150| ;  in  six  minutes  it  jumped  to  155.  Then  the 
pent-up  tiger  spirit  burst  from  control.  The  arena  rocked 
as  the  Coliseum  may  have  rocked  when  the  gates  of  the 
wild  beasts  were  thrown  o^>en,  and  with  wails  and 
shrieks  the  captives  of  the  empire  sprang  to  merciless 
encounter  with  the  ravenous  demons  of  the  desert.  The 
storm  of  voices  lost  human  semblance.  Clenched 
hands,  livid  faces,  pallid  foreheads  on  which  beads  of 
cold  sweat  told  of  the  interior  anguish,  lurid,  passion- 
fired  eyes,  — all  the  symptoms  of  a  fever  which  at  any 
moment  might  become  frenzy  were  there.  The  shouts 
of  golden  millions  upon  millions  hurtled  in  all  ears. 
The  labor  of  years  was  disappearing  and  reappearing  in 
the  wave  line  of  advancing  and  receding  prices.  With 
fortunes  melting  away  in  a  second,  with  five  hun- 
dred millions  of  gold  in  process  of  sale  or  purchase, 
with  the  terror  of  yet  higher  prices,  and  the  exultation 
which  came  and  went  with  the  whispers  of  fresh  men 
entering  from  Broad  Street  bearing  confused  rumors  of 
the  probable  interposition  of  the  government,  it  is  not 
hard  to  understand  how  reason  faltered  on  its  throne, 
and  operators  became  reckless,  buying  or  selling  without 
thought  of  the  morrow  or  consciousness  of  the  present. 
12 


266  MEN  AND   MYSTERIES   OF  WALL  STKEET. 

Then  came  the  terrific  bid  of  Albert  Speyer  for  any  num- 
ber of  millions  at  160.  William  Parks  sold  instantly  two 
millions  and  a  half  in  one  lot.  Yet  the  bids  so  far  from 
yielding  rose  to  161,  162,  162|.  For  five  minutes  the 
Board  reeled  under  the  ferocity  of  the  attack.  Seconds 
became  hours.  The  agony  of  Wellington  awaiting  Blucher 
was  in  the  souls  of  the  bears.  Then  a  broker,  reported 
to  be  acting  for  Baring  and  Brothers  at  London,  sold 
five  millions  to  the  clique  at  the  top  price  of  the  day. 
Hallgarten  followed ;  and  as  the  shorts  were  gathering 
courage,  the  certain  news  that  the  Secretary  of  the 
Treasury  had  come  to  the  rescue  swept  through  the 
chamber,  gold  fell  from  160  to  140,  and  thence,  with 
hardly  the  interval  of  one  quotation,  to  133.  The  end 
had  come,  and  the  exhausted  operators  streamed  out  of 
the  stifling  hall  into  the  fresh  air  of  the  street.  To 
them,  however,  came  no  peace.  In  some  offices  custom- 
ers by  dozens,  whose  margins  were  irrevocably  burnt 
away  in  the  smelting-furnace  of  the  Gold  Board,  con- 
fronted their  dealers  with  taunts  and  threats  of  violence 
for  their  treachery.  In  others  the  nucleus  of  mobs  be- 
gan to  form,  and,  as  the  day  wore  off,  Broad  Street  had 
the  aspect  of  a  riot.  Huge  masses  of  men  gathered 
before  the  doorway  of  Smith,  Gould,  Martin,  &  Co.  and 
Heath  &  Co.  Fisk  was  assaulted,  and  his  life  threat- 
ened. Deputy-sheriffs  and  police-officers  appeared  on 
the  scene.  In  Brooklyn  a  company  of  troops  were  held 
in  readiness  to  march  upon  Wall  Street. 

When  night  came,  Broad  Street  and  its  vicinity  saw 
an  unwonted  sight.    The  silence  and  the  darkness  which 


THE   GOLD-BROKERS.  267 

ever  rests  over  the  lower  city  after  seven  of  the  evening 
was  broken  by  the  blaze  of  gas-light  from  a  hundred 
windows,  and  the  footfall  of  clerks  hurrying  from  a 
hasty  repast  back  to  their  desks.  Until  long  after  Trin- 
ity bells  pealed  out  the  dawn  of  a  new  day,  men  bent 
over  their  books,  scrutinized  the  Clearing-House  state- 
ment for  the  morrow,  took  what  thought  was  possible 
for  the  future.  At  the  Gold  Exchange  Bank  the  weary 
accountants  were  making  ineffective  efforts  to  com- 
plete Thursday's  business.  That  toilful  midnight,  at  the 
close  of  the  last  great  passion-day  of  the  bullion-wor- 
shippers, will  be  ever  memorable  for  its  anxieties  and 
unsatisfying  anguish. 

Saturday  brought  no  relief.  The  Gold  Board  met 
only  to  adjourn,  as  the  Clearing-House  had  been  in- 
capable of  the  task  of  settling  its  accounts,  complicated 
as  they  were  by  ever  fresh  failures.  The  small  brokers 
had  gone  under  by  scores.  The  rumors  of  the  impend- 
ing suspension  of  some  of  the  largest  houses  of  the 
street  gave  fresh  grounds  for  fear.  The  Stock  Ex- 
change was  now  the  centre  of  attraction.  If  that 
yielded,  all  was  lost.  To  sustain  the  market  was 
vital.  But  whence  was  the  saving  power  to  come  ?  All 
through  yesterday  shares  had  been  falling  headlong. 
New  York  Central  careened  to  148,  and  then  recovered 
to  1852-.  Hudson  plunged  from  173  to  145.  Pittsburg 
feU  to  68.  Northwest  reached  62|.  The  shrinkage 
throughout  all  securities  had  been  not  less  than  thirty 
millions.  Would  the  impulse  downward  continue  ? 
The  throngs  which  filled  the  corridors  and  overhung 


268  MEN  AND   MYSTEKIES   OF  WALL   STKEET. 

the  stairway  from  which  one  can  look  down  upon  the 
Long  Eoom  saw  only  mad  tumult,  heard  only  the  roar 
of  the  biddings.  For  any  certain  knowledge  they  might 
have  been  in  Alaska.  But  the  financial  public  in  the 
quiet  of  their  offices,  and  nervously  scrutinizing  the 
prices  reeled  off  from  the  automaton  telegraph,  saw  that 
Vanderbilt  was  supporting  the  New  York  stocks,  and 
that  the  weakness  in  other  shares  was  not  sufficient  to 
shadow  forth  panic.  It  soon  became  known  that  the 
capitalists  from  Philadelphia,  Boston,  and  the  great 
Western  cities  had  thrown -themselves  into  the  breach, 
and  were  earning  fortunes  for  themselves  as  well  as 
gratitude  from  the  money-market,  by  the  judicious 
daring  of  their  purchases.  The  consciousness  of  this 
new  element  was  quieting,  but  Wall  Street  was  still 
too  feverish  to  be  reposed  by  any  ordinary  anodyne. 
A  run  on  the  Tenth  National  Bank  had  commenced, 
and  all  day  long  a  steady  line  of  dealers  filed  up  to  the 
counter  of  the  paying  teller  demanding  their  balances. 
The  courage  and  the  ability  in  withstanding  the  attack 
which  were  shown  by  the  president  and  his  associates 
deserve  something  more  than  praise.  The  Gold  Ex- 
change Bank  witnessed  a  similar  scene,  angry  brokers 
assaulting  the  clerks  and  threatening  all  possible  things 
unless  instantaneous  settlements  were  made.  The  free- 
dom with  which  the  press  had  given  details  of  the 
explosion  had  been  extremely  hurtful  to  the  credit  of 
many  of  the  best  houses.  In  a  crisis  like  that  of  Black 
Friday  the  sluice-gates  of  passion  open.  Cloaked  in  the 
masquerade  of  genuine  distrust,  came  forth  whispers 


THE   GOLD-BEOKEES.  269 

whose  only  origin  was  in  ancient  enmities,  long-treas- 
ured spites,  the  soundless  depths  of  unquenchable  malig- 
nities. Firms  of  stanchest  reputation  felt  the  rapier 
stroke  of  old  angers.  The  knowledge  that  certain  houses 
were  large  holders  of  particular  stocks  was  the  signal  of 
attacks  upon  the  shares.  Despite  of  outside  orders  for 
vast  amounts,  these  influences  had  their  effect  upon 
securities,  and  aided  to  tighten  the  loan  market.  One, 
one  and  a  half,  two  and  even  four  per  cent  were  the 
compulsory  terms  on  which  money  could  alone  be  bor- 
rowed to  carry  stocks  over  Sunday. 

On  Monday  the  27th  the  Gold  Board  met,  but  only 
to  be  informed  that  the  Clearing-House  was  not  yet 
ready  to  complete  the  work  of  Friday.  Important 
accounts  had  been  kept  back,  and  the  dealings,  swollen 
in  sum-total  to  five  hundred  millions,  were  beyond  the 
capacity  of  the  clerical  force  of  the  Gold  Bank  to  grapple 
with.  A  resolution  was  brought  forward  proposing  the 
resumption  of  operations  Ex-Clearing  House.  The 
measure  took  the  members  by  surprise,  for  a  moment 
quivered  between  acceptance  and  rejection,  and  then 
was  swiftly  tabled.  It  was  an  immense  bear  scheme, 
for  no  Exchange  can  transact  business  where  its  dealers 
are  under  suspicion.  All  outstanding  accounts  require 
immediate  fulfilment.  Failure  to  make  good  deliveries 
would  have  insured  the  instant  selling  out  of  defaulters 
"under  the  rule."  As  the  majority  of  brokers  were  in-' 
extricably  involved  in  the  late  difficulty,  the  only  con- 
sequence would  have  been  to  throw  them  into  bank- 
ruptcy, thus  bringing  some  sixty  millions  under  the 


270  MEN  AND  MYSTEEIES   OF  WALL   STKEET. 

hammer.  The  market  could  not  have  borne  up  under 
such  an  avalanche.  It  was  decided  that  the  Room 
should  be  kept  open  for  borrowings  and  loans,  but  that 
all  dealings  should  be  suspended.  One  result  of  this 
complication  was  that  gold  had  no  fixed  value.  It  could 
be  bought  at  one  house  for  133,  and  at  other  offices  sold 
for  139.  The  Board  thus  proved  its  utility  at  the  very 
juncture  when  least  in  favor. 

The  remaining  history  of  the  panic  need  not  long 
detain  us.  As  more  and  more  light  fell  upon  the 
tactics  of  the  ring,  it  was  seen  that  the  final  basis 
of  their  scheme  was  the  use  of  a  very  old  trick,  first 
put  in  practice  long  ago  on  the  London  Stock  Ex- 
change. Two  dealers  league  together.  One  buys  all 
that  he  can  by  cash  or  credit ;  the  other  sells  propor- 
tionately. One  loses  heavily-;  the  other  gains  vastly. 
The  former  breaks  and  retires ;  the  latter  remains,  and 
secretly  divides  up  the  profits.  With  proper  regard  for 
that  bulwark  of  the  American  people,  the  libel  law,  we 
shall  not  undertake  to  cany  out  the  comparison.  It 
may  not  be  unfair,  however,  to  note  as  an  example  of 
the  proportions  of  the  struggle,  that  Albert  Speyer,  on 
Friday,  bought  $  47,000,000  and  failed  to  make  good  his 
contracts  ;  while  Belden  &  Co.  "  broke  "  for  $  50,000,000  ; 
and  several  others,  supposed  to  be  acting  for  the  clique, 
had  obligations  out  for  so  many  millions  that  no  attempt 
has  yet  been  made  to  give  them  numerical  computation. 
As  a  relic  of  that  astonishing  conflict,  out  of  which  no 
one  is  supposed  to  have  made  anything,  we  subjoin  a 
statement  supposed  to  be  the  account  current  of  the 


THE   GOLD-BROKERS. 


271 


Delivered  to 

Lockwood  &  Co.  .  $10,000 
Stout  Thayer  .  .  20,000 
Dzondi,  Springer,  &  Co.  50,000 
Carver  &  Co.  .  .  430,000 
Gibson  Beadleston  .  75,000 
B.  K.  Stevens,  Jr.  .  25,000 
Lounsbery  &  Fanshaw  1,700,000 


Gold  Bank  with  Smith,  Gould,  Martin,  &  Co.,  which  has 
the  merit  of  having  been  indorsed  by  the  famous  com- 
mittee of  twenty,  who  finally  brought  order  out  of  the 
terrible  confusion.  The  reader  can  gather  from  this 
brief  paper  no  inaccurate  idea  of  the  magnificence  of  the 
dealings  of  Black  Friday  :  — 

Received  from 

"Wm.  Heath  &  Co.       .  $6,210,000 

White,  Morris,  &  Co.  .     400,000 

Dakin  &  Gillespie        .  1,980,000 

E.  K.  Willard          .  .  5,845,000 
Hodgskin,  Randal,  &  Co.         50,000 

Budge,  SchifF,  &  Co.  .     300,000 

Cushman  &  Hurlburt  .  50,000 

S.  R.  Jacobs     .         .  .     100,000 

Lange,  Bolle,  &  Anning  50,000 

Dean,  Maginnis,  &  Co.  .       95,000 

M.  Morgan's  Sons        .  20,000 

Foster  &  Randall      .  .       20,000 

J.  &  W.  Seligmau  &  Co.  225,000 

Hallgarten  &  Co.  .     200,000 

Domett  &  Nichols        .  10,000 

B.  Hall  &  Young      .  .     500,000 

G.  H.  &  H.  Redmond   .  875,000 

W.  C.  Mumford        .  .       50,000 

Meyer  &  Greve      .         .  200,000 

Kennedy  &  Hutchinson  .     100,000 

Robinson,  Cox,  &  Co.  .  .  30,000 

Lees  &  Waller.         .  .     200,000 

Eeed,  Leo,  &  Content    .  1,015,000 

Hagen  &  Billing       .  .     200,000 

E.  H.  Biederman           .  445,000 

G.  P.  Persch    .         .  .     735,000 

Robert  Waller       .         .  655,000 

Stout  Thayer    .         .  .       90,000 


300,000 
35,000 

134,000 
15,000 
15,000 
85,000 
30,000 


Fanshaw  &  Milliken 
Hallgarten  &  Co.  . 
Kamlah,  Sauer,  &  Co. 
Parker  Bros.  &  Geston 
Fellows  &  Co. 
Cunningham  &  Mead 
Maxwell  &  Graves 
Norton,  Haughton,  &  Co.  50,000 
Taussig,  Fisher,  &  Co.  .  90,000 
N.  R.  Travers  .  .  50,000 
Gray,  Prince,  &  Co.  1,245,000 
Chapin,  Bowen,  &  Day  2,915,000 
Wm.  Heath  &  Co.  .  200,000 
Cushman  &  Hurlburt  25,000 


$7,499,000 

Coin  due  dealer  .      $13,151,000 
Currency  due  Bank     20,650,000 


$20,650,000 


272  MEN   AND   MYSTERIES   OF  WALL   STREET. 

In  due  season,  after  some  anxious  weeks,  the  Gold 
Clearing-House  was  once  more  in  operation,  and  the  Gold 
Board  pursued  the  even  tenor  of  its  way.  Shortly,  upon 
the  renewal  of  daily  sessions,  at  a  large  gathering  of  the 
members,  a  resolution  was  quietly  passed  declaring  that 
at  some  future  moment,  to  be  hereafter  determined,  the 
Board  reserved  the  right  to  incorporate  in  its  deal- 
ings government  securities  and  exchanges.  Specie  pay- 
ments will,  therefore,  not  put  an  end  to  the  Gold 
Room. 

The  members  of  the  Board  are  now  four  hundred  and 
eighty  in  number.  The  large  proportion  have  connection 
with  the  Stock  Exchange,  and  what  has  been  said  re- 
specting the  frolicsome  spirit  of  the  dealers  in  stocks 
applies  with  even  greater  emphasis  to  the  gold-brokers. 
The  gayety  with  which  they  welcomed  last  Christ- 
mas-eve, in  a  grand  carnival  of  drums,  fifes,  tin-trum- 
pets, gongs,  «and  vocal  music,  exemplifies  the  delightful 
abandon  which  lurks  beneath  the  hard  exterior  of  the 
bullion-operators.  One  of  the  curious  features  of  the 
Board  is  in  its  officers.  Thomas  A.  Hoyt,  the  active 
Vice-President,  is  a  Presbyterian  clergyman.  Thomas 
P.  Akers,  the  Secretary,  has  been  a  member  of  Con- 
gress from  Tennessee,  and  gained  great  repute  in  former 
years  by  his  eloquent  labors  as  a  Methodist  preacher. 
Tall  and  broad-shouldered,  he  has  a  muscular  energy 
which  Morrisey  can  scarcely  surpass,  and  on  dull  days 
he  amuses  the  idle  crowd  around  the  fountain  when 
the  Soard  is  not  in  session,  by  taking  a  fair-sized 
man  lightly  in  the  palm  of  his  hand  and  holding 


TUP:   GOLD-BROKERS.  2V  J 

him  at  arm's-length,  while  he  himself  sits  quietly  in  his 
chair. 

A  very  considerable  amount  of  the  business  of  the 
Gold  Board  at  present  is  in  orders  from  the  South.  Some 
four  hundred  telegrams  arrive  daily  with  commissions 
from  this  and  other  sections.  During  the  panic  double 
the  number  were  received.  William  Bird,  who  sold  three 
million  dollars  short  in  September,  is  now  one  of  the 
largest  operators.  But  the  dealings  of  Trevor  and  Col- 
gate, and  Henry  Clews,  are  also  notably  extensive. 

The  steady  decline  of  gold  during  recent  months, 
amounting  to  a  fall  of  more  than  one  half  the  average 
premium  of  1869,  has  given  a  certain  feverishness  to 
the  market;  but  its  most  notable  effect  is  seen  in  the 
diminished  value  of  membership  of  the  Board.  Seats 
that  once  cost  five  hundred  dollars  were  sold  in  March, 
1870,  for  a  fifth  of  that  sum.  With  government  6s  of 
1881  at  116f,  when  bullion  sells  at  1141,  — the  figures 
of  March  3d,  —  it  is  not  surprising  that  veteran  dealers 
should  begin  to  discount  the  day  of  specie  payments, 
and  trim  their  sails  accordingly. 


274  MEN  AND   MYSTERIES   OF  WALL   STREET. 


CHAPTER    XIV. 

THE  MINING  BOARD. 

IN"  the  good  year  1854,  when  the  Kyle  and  Schuyler 
forgeries  and  the  "  drop "  in  railroad  shares  were 
agitating  the  Stock  Exchange,  there  were  two  or  three 
brokers  in  Wall  Street  who  did  not  care  a  sixpence  for 
the  tumult.  They  were  deep  in  mining  securities,  and 
the  fluctuations  of  the  market  had  little  effect  upon 
their  substantial  commodities.  Copper  was  the  leading 
fancy,  and  the  profits  in  that  direction  were  literally  im- 
mejise.  We  have  before  us  a  statement  of  the  prices  of 
Lake  Superior  Mining  Stock  at  this  period,  which  is 
worthy  of  reproduction  :  — 

Shares.         Paid  in.        Par  Value.   Bids  in '54.     VM*°* 

Boston  &  Pittsburg  6,000  $  18£  $111,000  145  $870,000 

Minnesota   .        .     3,000  22  66,000  175  525,000 

North  American     10,000  17  170,000  75  750,000 

National.        .        10,000  3  30,000  32  320,000 

Clark  .        .        .  20,000  1  20,000  10  200,000 

Rockland         .        20,000  1  20,000  12  240,000 

Scrutinize  these  figures  closely.  An  investment  of 
ten  thousand  dollars  would  have  made  the  lucky  specu- 
lator a  prince  among  his  fellows.  It  is  the  very  multi- 
plication-table of  wealth  !  How  much  of  this  was  due 
to  "washings"  at  Share  Boards  ?  Rumor  is  silent;  but 


m 

THE   MINING  BOAED.  275 

at  all  events  New  York  was  innocent  of  any  such 
speculative  manoeuvre.  George  F.  Eiley,  Ralph  King, 
John  Simpkins,  and  E.  H.  Eichard  were  in  those  days 
the  principal  mining-brokers.  But  they  had  no  regular 
place  of  meeting  or  definite  organization.  All  the  busi- 
ness was  done  in  offices.  In  fact  the  first  Mining  Board 
in  this  city  dates  no  further  back  than  1857. 

Tradition  is  very  vague  in  details  regarding  this  Board. 
It  was  started  at  29  William  Street.  The  stocks  'dealt 
in  were  of  different  complexion  from  those  in  the  table 
just  presented.  The  call  contained  the  names  of  com- 
panies whose  property  was  in  North  Carolina  gold  and 
copper  mines,  Georgia  gold-mines,  Tennessee  and  Mary- 
land copper,  New  York  and  Pennsylvania  copper  and 
lead  mines.  On  glancing  at  the  localities,  and  contem- 
plating the  actual  mineral  yield  of  these  sections  during 
the  past  dozen  years,  one  is  thrown  into  an  abyss  of 
compassion  for  the  unhappy  purchasers  of  stock.  Deal- 
ers must  have  developed  a  volume  of  imagination  in 
their  speculations  sufficient  in  a  purely  literary  direction 
to  have  created  half  a  dozen  first-class  epics.  Fulton 
Cutting,  Talmadge  &  Mawley,  and  E.  L.  Cutting  have 
the  credit  of  being  in  the  forefront  of  the  operations. 
The  times  were,  however,  inauspicious  ;  and  six  months 
brought  the  board  to  a  sudden  end. 

In  1859  a  fresh  board  was  inaugurated.  Its  earlier 
sessions  were  held  in  the  rear  of  Talmadge  &  Mawley's 
office,  No.  25  William  Street.  Two  months  later  it  had 
already  outgrown  its  narrow  quarters,  and,  crossing  the 
street,  found  shelter  at  No.  24.  Mr.  Talmadge  was 


276  MEN  AND   MYSTERIES   OF  WALL   STREET. 

elected  President.  The  dealings  consisted  of  such  sub- 
stantial stocks  as  the  copper-mines  of  Lake  Superior 
along  with  Will-of-the-wisp  North  Carolina  and  Georgia 
gold  and  copper  mines,  and  Tennessee  copper  shares. 
The  real  object  of  the  Board  was  to  work  off  these  latter 
fantasies.  A  little  nest  of  Baltimore  operators,  who 
found  themselves  altogether  too  heavily  weighted  by 
the  commodities,  had  conceived  the  idea  of  creating  a 
mining  furor  in  New  York.  Hence  the  organization. 
All  the  leading  manipulators  of  '57  were  in  the  scheme. 
Seton  &  Wainwright  and  Ashley  &  Norris  were  also 
prominent.  Two  of  the  liveliest  stocks  were  the  North 
State  Gold  and  Copper  Company  and  the  Gardner  Hill 
Gold  and  Copper  Company.  Both  the  mines  were 
in  Guilford  County,  North  Carolina,  about  seven  miles 
from  Greensboro'.  Veterans  in  the  business  remember 
the  old  McCulloch  mine.  The  North  State  Company 
had  purchased  this  very  property  for  only  $  1,200,  and 
now  placed  it  upon  the  market  as  the  modern  Eldo- 
rado,—  so  rich  in  gold- veins  and  copper-leads  that  the 
capital  stock  could  not  be  a  dollar  under  a  million ! 
Accordingly  200,000  shares  were  issued  at  five  dollars  par. 
The  auction-hammer  pattered  ;  the  brokers  "  washed  " 
the  new  issue  up  and  up,  until  large  quantities  were 
actually  sold  at  $  4.  The  Gardner  Hill  Company  had 
much  the  same  history,  except  that  the  first  cost  was 
$  30,000.  The  capital  was  a  million  in  five-dollar  shares  ; 
and  under  clever  management  a  very  considerable  num- 
ber of  sales  took  place  at  eight  dollars.  That  price 
would  have  made  the  mine  worth  $  1,600,000,  giving  the 


THE   MINING   BOARD.  277 

promoters,  who  had  paid  only  thirty  thousand  dollars  in 
cash,  the  neat  net  profit  of  a  million  and  a  half,  with 
seventy  thousand  thrown  in  as  contingent  expenses  I 
Naturally,  with  such  glittering  prospects  of  sudden 
opulence,  the  Board  was  fostered  by  every  appliance 
which  could  decoy  outsiders. 

The  next  year  a  Mr.  Clayton  of  Baltimore  was  ap- 
pointed President.  For  Treasurer,  a  leading  operator, 
one  Charles  Kowalski,  a  Pole,  was  selected.  The 
election  of  Lincoln,  and  the  war-cloud  in  the  South  soon 
threw  the  Guildford  County  stocks  into  disfavor.  The 
shares  fell  to  fractions  of  zero  ;  and  Kowalski,  driven 
crazy  by  misfortune,  jumped  off  a  clock  and  so  closed 
his  account  with  this  world.  The  affairs  of  the  organi- 
zation were  at  once  wound  up,  and  on  dividing  the  assets 
it  was  discovered  that  the  Treasurer  had  used  up  all  the 
funds  in  a  frantic  attempt  to  "  cover." 

The  regular  Stock  Exchange,  for  the  next  three  or 
four  years,  was  the  scene  of  what  little  activity  pre- 
vailed in  mining  matters.  "Mariposa"  was  the  prin- 
cipal fancy.  The  history  of  that  stock  in  which 
Colonel  Fremont,  Morris  Ketchum,  the  state  of  Cali- 
fornia, and  other  powers,  political,  legislative,  and  finan- 
cial, figured  largely,  has  been  told  so  often  that  any 
further  comment  would  be  superfluous.  It  was  one 
of  those  securities  in  which  "bear"  operations  were 
profitable  and  "bull"  movements  disastrous.  Copake 
Iron  was  another  fantasy.  In  January,  '66,  it  reached 
0|,  and  thereafter  ceased  being  quoted.  Mining  stocks, 
however,  were  never  popular  among  the  heavy  railroad 


278  MEN   AND   MYSTEKIES   OF  WALL   STREET. 

brokers ;  the  calls  were  slurred  over,  and  the  opportu- 
nity for  speculation  lost,  in  the  hurry  for  the  larger 
prizes  of  Pacific  Mail,  Erie,  Michigan  Southern,  and 
the  rest.  When  the  tide  of  popular  investment,  there- 
fore, had  begun  to  buoy  up  mining  shares,  the  brokers 
in  this  merchandise  determined  to  make  a  third  attempt 
for  a  Board  of  their  own. 

On  March  21,  1864,  forty-one  gentlemen  met  in  the 
office  of  J.  B.  Norris,  and  subscribed  their  names  as 
members  of  the  Mining  Board  of  New  York.  The 
President  elect  was  John  Simpkins.  Nearly  all  con- 
nected with  it  had  seats  in  the  regular  Stock  Ex- 
change. The  fee  for  admission  was  placed  at  $  250, 
and  the  earlier  sessions  were  held  at  the  old  rooms  of 
the  Gold  Board,  corner  of  Williams  Street  and  Exchange 
Place.  Next  it  migrated  to  12  Wall  Street,  and  again 
to  No.  7  New  Street,  in  a  dingy  and  dreary  room,  whose 
only  merit  was  its  very  cheap  rent.  Minnesota  was  one 
of  the  leading  shares,  and  the  agile  bulls  tossed  it  up  to 
$  109.  Another  was  Evergreen  Bluff,  which  sold  as 
high  as  &J^.  Both  have  long  since  gone  out  of  sight, 
and  their  holders  draw  dividends  from  Dreamland.  The 
same  may  be  said  of  Caledonia  copper,  which  reached 
$  10,  and  then  exploded.  Quincy  and  Central  were 
also  favorites ;  the  former  running  up  to  95,  and  the 
latter  to  70.  One  can  buy  them  now  for  25  and  be 
sure  of  three  dollars  in  annual  dividends,  until  the 
trustees  deem  best  to  "  pass "  them. 

The  call  of  the  Board  embraced  other  stocks  of  ster- 
ling value  ;  but,  in  general,  the  great  companies,  whose 


THE   MINING   BOARD.  279 

mills  and  mines  have  been  coining  gold  and  silver  for 
the  world  at  the  rate  of  a  hundred  million  of  dollars  a 
year,  are  under  the  control  of  men  who  keep  their  own 
secrets,  and  prefer  to  sell  their  shares,  if  at  all,  by  pri- 
vate hands.  There  has  never  been  any  such  representa- 
tive stock  organization,  in  New  York,  for  the  sale  of 
legitimate  mining  securities,  as  exists  for  governments, 
State  bonds,  and  railroad  property.  Chestnut  Street, 
Philadelphia,  State  Street,  Boston,  and  the  financial 
quarter  of  San  Francisco,  all  equal  or  eclipse  the  me- 
tropolis in  this  important  department. 

While  the  mining-brokers  were  maintaining  a  decep- 
tive vigor,  and  the  shuttlecock  game  of  bids  and  offers 
was  played  with  waning  zest,  the  Petroleum  mania 
burst  out  in  Western  Pennsylvania,  and  spread  like  a 
prairie-fire  through  the  Atlantic  cities.  The  features  of 
that  curious  frenzy  are  still  fresh  in  every  memory. 
Probably  swift  wealth  never  fell  upon  a  class  of  peo- 
ple whose  education  was  so  preternaturally  insufficient 
for  the  new  cares  and  duties  which  opulence  brings 
in  its  train.  The  world  has  known  enough  of  the 
vulgar  rich,  but  ordinarily  these  are  individual  cases. 
The  oil  wells  of  West  Virginia  and  the  Alleghany  Pdver 
Valley  floated  a  whole  community  upon  their  surface, 
and  poured  into  New  York  a  most  astonishing  descrip- 
tion of  Croesuses.  They  thronged  the  principal  hotels, 
chiefly  those  with  marble  fronts.  The  air  of  fashionable 
restaurants  was  laden  with  the  essential  oils  of  kerosene. 
Gallic  waiters  were  feed  liberally  for  bringing  on  strange 
French  dishes,  and  then  feed  with  even  greater  liber- 


280  MEN  AND   MYSTERIES   OF  WALL   STREET. 

ality  for  carrying  them  away.  Husbands,  wives,  and 
daughters,  accustomed  to  the  fare  which  Dickens 
thought  indigenous  in  his  tour  through  the  Far 
West,  gave  orders  for  what  they  did  not  want  in  a 
language  which  they  did  not  comprehend,  and  which 
became  equally  incomprehensible  to  others  when  trans- 
formed by  agricultural  pronunciation.  There  was  a 
melancholy  as  well  as  comical  aspect  in  that  sudden, 
fresh  butterfly  life,  never  quite  able  to  free  itself  of  the 
traces  of  its  origin.  The  tragic  romance  of  some  of  these 
owners  of  petroleum  farms,  who  spent  fortunes  even 
quicker  than  they  acquired  them,  is  one  of  the  darkest 
shadows  of  the  excitement.  But  in  1865  they  were  in 
their  fullest  bloom ;  and  the  rumor  of  vast  riches  open 
to  any  one  who  chose  to  invest  in  oil  stock  soon  created 
a  crowd  of  brokers  eager  to  assist  the  outside  public. 
The  organization  of  a  Petroleum  Board  followed  soon 
after,  the  first  meeting  taking  place  the  31st  of  Octo- 
ber, 1865,  at  16  Broad  Street.  Samuel  B.  Hard  was 
elected  President,  and  Edmund  C.  Stedman,  the  poet 
broker,  Secretary. 

The  earlier  sessions  of  the  Board  were  comparatively 
quiet.  Only  eleven  stocks  were  upon  the  call.  They 
included  Central,  for  which  75  was  bid,  while  holders 
demanded  90  ;  Germania,  which  started  at  If,  and  soon 
became  the  Erie  of  Petroleum ;  Titus,  1\ ;  Manhattan, 
2  ;  Eynd  Farm,  5|  to  6  ;  Buchanan  Farm,  3 \  ;  Noble  and 
Delameter  Piock  Oil,  4 ;  Knickerbocker,  2£ ;  Highgate, 
If  ;  together  with  McKinley  and  Clifton  of  indifferent 
reputation.  Gradually,  under  the  clever  manipulation 


THE   MINING   BOARD.  281 

of  operators,  the  Board  grew  into  a  distinct  feature  of 
the  street.  New  members  from  the  Stock  Exchange  be- 
came subscribers,  and  readily  paid  the  $  250  initiation- 
fee.  The  farther  the  oil-fever  spread,  and  the  wilder 
the  stories  of  the  profits  in  certain  shares,  the  greater 
the  interest  evinced  by  outsiders.  The  rooms  were  fre- 
quently thronged.  Half  the  promoters  of  companies 
had  such  faith  in  their  own  stock  as  to  hold  it  with 
blind  pertinacity,  and  this  very  confidence  was  an  addi- 
tional lure  to  the  public  at  large.  The  brokers  made 
large  commissions.  Orders  came  in  from  all  quarters ; 
and  the  operations  were  marked  by  all  the  peculiarities 
of  the  regular  Exchange.  One  of  the  shrewdest  and 
most  versatile  speculators  was  Ulrich  de  Comeau.  He 
had  a  singularly  quick  and  retentive  memory,  and  great 
power  of  mental  combination ;  a  man  who  relished  turf- 
sports,  knew  all  the  points  of  a  horse,  and  seldom  failed 
to  estimate  accurately  the  degree  of  speculative  bottom 
in  each  new  petroleum  fancy.  Just  at  the  right  mo- 
ment he  retired  from  the  Board  and  purchased  an  Illi- 
nois stock  farm  with  a  portion  of  his  oil  profits.  Other 
prominent  operators  were  J.  E.  Morris,  E.  C.  Stedman 
&  Co.,  Col.  J.  Turner,  Hard,  Kendall,  Geo.  F.  Eiley,  F. 
A.  Artault.  Many  of  them  were  new  to  the  business, 
but  not  a  few  were  veterans  of  the  street.  At  the  height 
of  the  excitement  the  call  contained  the  names  of  some 
thirty-five  companies  ;  corners  were  frequent,  and  large 
sums  changed  hands  in  the  dexterous  manipulation  of 
values.  Excelsior  was  a  leading  football  selling  up  to 
$17,  with  daily  and  wide  fluctuations.  Where  the  sale 


282  MEN  AND  MYSTEKIES   OF  WALL   STREET. 

value  of  a  stock  was  small,  the  equipoise  was  kept  up 
by  the  largeness  of  the  bids.  Shade  Kiver  was  a  favor- 
ite, with  offers  at  $  7 ;  Oil  Creek  at  $  4  was  another. 
These  three  stocks  are  now  completely  out  of  sight^  or 
unsalable.  The  fate  of  some  of  the  other  active  shares 
may  be  seen  in  the  subjoined  table :  — 

Companies.  Bids,  1865.  1869. 

BennehoffRun         .          $21  ...        $0.40 

United  States        ..        40  ....       0.80 

Pithole      ....    18  ....    1.50 

Central          ...      100  ....       0.75 

Rynd  Valley     ...     8  ....   0.35 

On  the  1st  of  January,  1866,  the  Mining  and  Petro- 
leum Exchanges  were  amalgamated  under  the  title  of 
the  Petroleum  and  Mining  Board.  A  room  in  the  new 
Stock  Exchange  was  leased  at  an  extravagant  rent,  the 
fee  was  raised  to  $  1,000,  and  many  new  members  from 
the  Open  and  Ptegular  Boards  were  admitted.  Specula- 
tion under  the  changed  auspices  sensibly  increased,  and 
for  a  year  the  rooms  were  the  scene  of  genuine  excite- 
ment. There  was  a  fine  exaggeration  and  a  beautiful 
disregard  of  ordinary  notions  regarding  what  constitutes 
proprietorship,  in  the  creation  of  not  a  few  of  the  corpo- 
rations which  now  appeared  on  the  list.  To  buy  land 
for  $  2,000  and  then  issue  shares  for  $  600,000  was  a 
conservative  process  compared  to  some  of  the  antics 
of  these  imaginative  speculators.  Magnificent  bubbles 
were  blown  into  prismatic  and  profitable  radiance  with 
nothing  more  substantial  than  borrowed  phials  of  oil 
and  deeds  of  property,  whose  only  value  consisted  in 


THE  MINING  BOARD.  283 

the  durable  nature  of  the  parchment  and  the  abundant 
stamps  wherewith  they  were  adorned.  The  Napoleon 
Oil  Company  was  a  notable  example  of  this  class.  It 
claimed  to  have  ownership  of  extensive  lands  in  Ken- 
tucky, and  by  the  versatile  combinations  of  operators 
a  corner  was  effected  carrying  the  shares  from  $  2  up  to 
$  32.  Men  who  had  agreed  to  deliver  10,000  certificates 
for  $  30,000  at  buyer's  option  could  make  their  contracts 
good  only  by  paying  $  320,000  to  the  controlling  clique. 
Brokers  everywhere  were  on  the  verge  of  ruin.  A  few 
appealed  to  the  courts,  and  on  investigation  it  was 
proven  that  the  company  had  no  real  estate,  no  oil 
shafts,  nothing  but  an  office,  a  small  accumulation  of 
petroleum  in  exquisite  glass  cans,  and  a  bountiful  sup- 
ply of  audacity  to  which  of  course  no  mercantile  value 
could  be  affixed ! 

Some  of  the  mining  companies  had  scarcely  a  better 
basis.  Three  fancies,  in  particular,  commanded  the 
market  by  their  large  dividends  and  magnificent  pre- 
tensions. One  was  the  New  York  and  Nevada  Gold 
and  Silver  Mill  and  Mining  Company ;  another,  the 
New  York  and  Washoe  Mining  Company.  The  third 
bore  the  name  of  the  New  York  and  Eeese  Eiver  Com- 
pany. The  capital  stock  of  the  first  was  $  660,000  ;  of 
the  second,  $  1,000,000  ;  of  the  last,  $  1,500,000.  George 
A.  Freeman  was  President,  and  John  J.  Osborn  was 
Treasurer  of  each  of  these  corporations.  William  H. 
Forbes,  likewise  a  trustee  in  each,  formed  with  the 
others  a  majority  of  the  triple  management.  There  was 
still  a  fourth  company,  called  the  New  York  and  Santa 


284  MEN   AND   MYSTERIES   OF  WALL   STEEET. 

F6"  Mining  Company  of  Nevada,  of  which  these  three 
gentlemen  were  sole  trustees,  and  which  represented  a 
paid-up  capital  of  over  $  700,000.  The  shares  of  this 
latter  stock  were  also  quoted  on  the  Boards ;  but  as  in 
full  bulk  the  capital  was  $  5,000,000,  an  inauspicious 
weakness  disclosed  itself.  Presently  came  litigation, 
merciless  scrutiny,  and  an  explosion  of  indignation  not 
lessened  by  the  sharp  decline  of  all  four  "securities." 
The  facts  revealed  to  the  startled  Santa  Fe  shareholders 
were  remarkable  as  illustrations  of  how  speculation  is 
fostered.  Not  one  of  the  three  first  corporations,  whose 
titles  we  have  already  given  at  length,  had  either  earned 
a  dollar  or  possessed  an  available  fraction  of  a  dollar  in 
its  treasury.  $512,000  had  been  paid  in  gold  as  divi- 
dends. Reese  River  took  three  per  cent ;  Washoe,  five 
per  cent ;  Nevada,  ten  per  cent.  The  buyers  of  these 
stocks  had  exulted  over  lavish  distributions  of  the  pre- 
cious metal,  salable  at  the  Gold  Room  for  150,  although 
the  mines  had  yielded  no  auriferous  fruitage,  and  the 
mills  had  not  made  enough  to  cover  the  running  ex- 
penses. It  was  either  the  most  wonderful  example  of 
alchemy  or — something  else,  to  be  found  in  history. 
Investigation  exploded  the  alchemy  theory.  All  that 
had  happened  was  simply,  that,  as  Freeman,  Osborne, 
and  Forbes  were  controlling  trustees  of  the  four  com- 
panies, and  as  they  felt  bound  to  do  what  they  could 
for  their  fellow-men  by  fulfilling  the  natural  expectation 
for  profits,  —  rendered  essentially  difficult  by  the  non-ex- 
istence of  said  profits,  —  they  had  taken  the,  cash  capital 
of  Santa  F6  and  paid  it  out  in  dividends  to  tlw  stock- 


THE   MINING   BOARD.  285 

holders  of  the  other  corporations.  It  was  probably  in  a 
somewhat  similar  manner  that  the  ancient  Egyptians 
were  able  to  make  bricks  without  straw ! 

Bled  in  such  various  ways,  twisted  by  corners,  and 
caught  by  the  manifold  subtleties  of  complaisant  and 
astute  trustees,  the  operators  both  inside  and  outside  be- 
gan to  lose  heart.  By  the  summer  of  1867  the  business 
of  mines  and  oil-wells  had  so  far  decreased  that  half  the 
brokers  withdrew.  The  Board,  as  usual  in  every  period 
of  depression,  began  a  fresh  pilgrimage,  first  occupying 
a  chamber  in  New  Street,  and  next  the  ground-floor  of 
37  Broad  Street,  where  the  sessions  are  still  held.  The 
character  of  some  of  the  investments  in  which  it  deals 
may  be  judged  by  a  statement  of  prices  at  two  different 
dates  :  — 

Companies.                             1866.  1870. 

Consolidated  Gregory       .     $  21.00  ....    $  L70 

Smith  &  Parmelee         .        .  15.00  .        .        .        .1.80 

Quartz  Hill         .         .        .         6.00  ....       0.75 

Grinnell         ....    3.00  ....  0.40 

Benton       ....        2.50  ....       0.12 

The  one  hundred  and  eighty  Mining  Companies  now 
in  this  city  represent  about  two  hundred  millions  of 
capital,  and  there  are  about  thirty-five  millions  invested 
in  petroleum.  In  the  fever  days  of '65  and  '66  the  nom- 
inal capital  of  both  interests  was  $400,000,000.  But 
whatever  is  of  genuine  value  in  these  stocks  may  safely 
be  assumed  as  held  in  private  hands,  and  seldom  pre- 
sented for  sale  in  the  eddying  uncertainties  and  specu- 
lative quicksands  of  the  Broad  Street  Board. 


286  MEN  AND   MYSTERIES   OF  WALL   STREET. 


CHAPTER    XV. 

BEFORE   1837. 

IN  the  good  old  days  of  knee-breeches  and  shoe- 
buckles,  when  Washington  was  President,  and  Con- 
tinental money  was  worth  a  trifle  more  as  currency  than 
as  waste  paper,  some  twenty  New  York  dealers  in 
public  stock  met  together  in  a  broker's  office,  and  signed 
their  names  in  the  bold,  strong  hand  of  their  generation 
to  an  agreement  of  the  nature  of  a  protective  league. 
This  document  is  still  extant,  and  declares  that  "  we  the 
subscribers,  brokers  for  the  purchase  and  sale  of  public 
stock,"  agree  to  do  business  for  customers  at  not  less  than 
one  fourth  of  one  per  cent,  and  to  give  preference  to  each 
other  in  all  transactions.  Leonard  Bleecker  leads  off 
among  the  signers,  and  one  finds  such  other  solid  names 
as  Hugh  Smith,  Bernard  Hart,  the  McEvers,  John 
Henry,  Seixas,  and  Hardy.  The  date  of  this  curious 
paper  is  May  17,  1792. 

The  volume  of  business  of  all  these  primitive  New 
York  brokers  could  not  have  been  much  above  that  of 
even  the  poorest  first-class  Wall  Street  house  in  our 
time.  The  Revolutionary  "  shin-plasters,"  as  the  irrev- 
erent already  styled  them,  were  spread  over  the  land 
in  such  plenty  that  there  were  a  hundred  dollars  to 
each  inhabitant.  Something  was  to  be  made,  therefore, 


BEFORE   1837.  287 

from  the  fluctuations  to  which  they  were  unhappily 
liable.  Indeed,  one  of  the  greatest  broker  firms  of  sub- 
sequent years  derived  its  capital  from  the  lucky  specula- 
tions of  its  senior  member  in  this  currency. 

The  war  of  1812  gave  the  first  genuine  impulse  to 
speculation.  Government  issued  sixteen  million  treas- 
ury notes,  and  put  loans  amounting  to  one  hundred  and 
nine  millions  on  the  market.  There  were  endless  fluc- 
tuations, and  the  easy-going  capitalists  of  the  time 
managed  to  gain  or  lose  handsome  fortunes.  Bank  stock 
was  also  a  favorite  investment.  An  illustration  of  one 
of  the  sources  of  money-making  to  brokers  at  this  period 
is  found  in  the  fact,  that  United  States  6s  of  1814  were 
at  50  in  specie  and  70  in  New  York  bank  currency. 

Our  present  governments  at  par  in  gold,  140  in  green- 
backs, would  be  an  exact  parallel.  In  1816  one  could 
count  up  two  hundred  and  eight  banks,  with  a  capital 
of  S  82,000,000.  When  the  peace  of  Utrecht  was  de- 
clared, they  all  began  to  fail,  East  and  West.  Forty  mil- 
lions of  dollars  were  blotted  out  in  a  few  months. 
There  was  an  immense  amount  of  depreciated  paper 
afloat.  Philadelphia  especially  suffered. 

Meanwhile  the  little  league  of  New  York  brokers 
gradually  increased  in  numbers  and  in  a  sense  of  their 
importance.  They  met  during  stormy  or  wintry  days 
in  a  chamber  of  the  old  Tontine  coffee-house,  high  up 
under  the  eaves.  On  pleasant  afternoons  they  consulted 
in  solemn  manner  on  the  open  pavement  of  WaU  Street, 
down  where  the  New  York  Courier  and  Enquirer  build- 
ing once  stood.  As  yet  nothing  but  the  signatures  on 


288  MEN  AND   MYSTERIES   OF  WALL   STREET. 

a  strip  of  parchment  united  them.  Philadelphia,  in 
this  respect  was  far  ahead  of  Gotham,  having  a  thorough 
stock  organization,  president,  secretaries,  and  all  the 
paraphernalia  of  an  Exchange.  One  day  in  1817  the 
New  York  stock-dealers  met  in  the  room  of  an  associate, 
and  voted  to  send  a  delegate  over  on  the  stage  line  to 
investigate  the  system  adopted  in  the  rival  city.  Tra- 
dition informs  us  that  Mr.  Will  Lawton,  just  married 
and  quite  ready  for  a  bridal  trip,  was  finally  selected  for 
the  mission.  The  visit  was  successful ;  and  immediately 
upon  the  return  of  this  committee  of  one,  the  draft  of 
a  constitution  and  by-laws,  framed  from  that  of  the 
Philadelphia  Board,*  received  the  final  approbation 
of  a  sufficient  number  of  the  brokers  to  enable  the 
New  York  Stock  Exchange  to  become  a  definite 
fact.  Three  years  after,  on  the  21st  of  February,  1820, 
this  preliminary  code  of  rules  received  a  thorough  re- 
vision, and  the  organization  was  strengthened  by  the 

*  Why  New  York  should  have  been  dependent  upon  its  sister  com- 
munity for  suggestions  concerning  stock  brokerage,  and  why  the  dele- 
gate sent  forward  should  have  been  so  kindly  received,  are  puzzling 
questions  in  view  of  a  certain  affair  that  took  place  about  this  time.  A 
ship  had  arrived  with  great  news  from  London,  leading  to  an  immediate 
rise  in  stocks.  When  the  stage  set  out  for  Philadelphia,  it  carried  among 
its  passengers  three  of  the  smartest  operators  on  Manhattan  Island.  At 
Powles  Hook  the  lumbering  coach  became  suddenly  disabled,  and  a  de- 
lay of  two  or  three  hours  was  the  consequence.  The  New- Yorkers 
hired  a  post-chaise,  drove  full  speed  over  the  rest  of  the  route,  and 
quietly  bought  up  all  the  floating  stock  in  Philadelphia.  When  the 
mail  arrived  the  Quakers  were  fiercely  indignant,  and  declared  that 
there  had  been  a  collision  with  the  stage-driver.  The  suspicion,  it 
should  be  added,  was  not  without  good  grounds. 


BEFORE    1837.  280 

accession  of  some  of  the  heaviest  capitalists  in  the  city. 
Indeed,  with  1820  the  real  history  of  the  Exchange  may 
properly  be  said  to  commence.  Then  it  was  that  Nat 
Prime,  John  Ward,  and  others,  kings  of  the  street,  made 
the  Board  the  vehicle  of  their  stock  transactions.  The 
United  States  Bank  with  its  branches  was  already  in 
operation ;  and  some  eighty  millions  in  stock,  represent- 
ing so  much  fresh  capital  in  the  hands  of  the  new  in- 
corporations which  had  taken  the  place  of  the  old  war 
banks,  afforded  frequent  opportunities  for  speculation. 
In  this  very  year  of  the  revision  we  find  in  the  New 
York  American  a  fierce  paragraph  upon  the  progress  of 
share  gambling,  apropos  of  the  fluctuation  of  United 
States  Bank  stock  from  103  to  106,  the  "  shorts  "  having 
hastened  to  cover,  for  fear  of  a  momentary  "  corner." 

In  1822  the  Daily  Advertiser  notes  the  fact,  that  on 
April  10th  bank  stock  sold  at  9J  before  11  A.M.,  at 
lOf  by  noon,  and  9£  at  2  o'clock.  Between  1  and  2 
p.  M.  the  news  of  the  "  Cambria "  was  published,  an- 
nouncing that  English  five  per  cents  were  to  be  reduced  to 
four  per  cents,  and  that  the  Bank  of  England  had  lowered 
its  interest  correspondingly.  "  What  a  pity  it  is,"  cries 
the  editor,  "  that  even  the  price  of  our  stocks  is  to  be 
regulated  by  the  jobbers  of  'Change  Alley,  in  London!" 
"  All  that  mainly  interests  us,"  continues  the  high-spir- 
ited writer,  "  from  a  public  revenue  for  the  support  of  the 
nation  down  to  a  pair  of  shovels  and  tongs  for  our 
private  chimney-corners,  so  much  rests  on  foreign  acts 
and  actors  that  a  noble,  generous  home  feeling  cannot 
be  fully  entertained  in  the  hearts  of  our  citizens."  We 


290  MEN  AND   MYSTEKIES   OF  WALL   STREET. 

quote  these  words  that  the  reader  may  participate  in  the 
thrill  of  "  home  feeling  v  which  must  have  come  over 
the  editor  only  three  weeks  later.  For  on  May  1st, 
without  the  interposition  of  either  "'Change  Alley"  or 
English  ships,  an  immense  "  bear "  pressure  in  Wall 
Street  forced  holders  of  hypotheticated  stock  to  throw 
it  over  at  once,  and  carried  bank  shares  from  110  to 
98.  All  the  New  York,  Philadelphia,  and  Baltimore 
banks  stopped  discounting.  The  London  jobbers  could 
not  have  done  better. 

Of  the  gossip  of  the  Stock  Exchange  in  those  days 
very  little  has  come  down  to  us.  Membership  cost 
$  100,  and  there  was  plenty  of  blackballing.  No  broker 
was  allowed  to  leave  the  room  during  sessions.  If  a 
message  came  to  a  broker  there  was  always  a  fine  to 
pay.  In  1824  Warren's  offices  were  hired  at  a  rent  of 
$  500  a  year.  J.  W.  Bleecker  was  long  the  President. 
When  he  went  out  of  office  old  Nat  Prime  moved  that 
two  services  of  silver-plate  should  be  voted  him,  with 
a  hundred  fresh-minted  dollars  in  them.  The  Board 
promptly  acted  on  this  Prime  suggestion. 

It  was  not  until  the  finger-hand  of  the  century  dial 
had  reached  its  first  quarter  that  the  United  States 
plunged  fairly  into  speculation.  In  1825  the  race  be- 
gan, and,  judging  from  incidents  gleaned  here  and  there 
from  old  papers,  the  start  was  what  boating-men  call  a 
"  spurt."  In  Providence,  R.  I.,  for  example,  on  April  22d 
books  were  opened  for  subscriptions  to  the  Blackstone 
Canal.  The  capital  was  fixed  at  $500,000,  and  only 
about  two  thirds  of  this  could  be  taken  by  Providence 


BEFORE   1837.  291 

people.  Nevertheless,  by  nightfall  the  subscriptions  had 
reached  $  1,127,900  !  New  York  showed  an  even  more 
astonishing  proof  of  flush  times  and  speculative  eager- 
ness. The  Water  Works  Company  was  authorized  to 
hold  two  millions  of  capital,  and  ten  millions  were  sub- 
scribed. The  Morris  Canal  and  Banking  Company, 
whose  capital  was  fixed  at  $  1,000,000,  had  twenty  mil- 
lions of  subscriptions !  In  Philadelphia  the  Bank  of 
Southwark  opened  its  books  on  a  certain  day  to  the 
public,  and  the  rush  of  capitalist  subscribers  was  like  a 
mob.  Noses  were  smashed,  hats  jammed  in,  and  the 
police  court  was  at  work  over  the  wounded  for  weeks 
after.  They  did  business  on  margins  even  then,  and 
this  fever  for  acquiring  certificates  of  shares  doubtless 
owed  its  intensity  to  the  fact  that  only  a  small  instalment 
was  required  on  the  first  payment.  Everybody  hoped 
that  by  the  second  call  they  could  sell  out  at  a  profit. 

England  is  scandalized  at  some  of  the  developments 
of  Wall  Street  speculation ;  but  there  is  not  a  trick  or 
scheme  in  the  entire  history  of  New  York  stock-jobbing 
that  cannot  be  illustrated  by  dozens  of  London  ex- 
amples. This  very  American  fever  of  '25  was  calmness 
itself  compared  to  the  fiery  pulse-beat  of  speculation  with 
which  all  England  was  throbbing.  Merchants  and  clerks, 
wives  and  widows,  the  judge  on  the  bench,,  the  jury  in 
the  box,  the  lawyer  and  his  client,  doctors  and  patients, 
the  clergy,  the  aristocracy,  and  even  their  flunky  ser- 
vitors, all  hung  upon  the  action  of  the  London  Exchange. 
Men  paid  35  as  a  premium  for  United  Mexican  mining 
shares  in  December,  '24,  and  by  January  sold  them  out 


292  MEN  AND   MYSTEEIES  OF  WALL  STREET. 

at  155.  The  subscribers  for  Eeal  del  Norte  paid  down 
£70.  By  December  the  same  shares  sold  for  £550,  and 
in  January  of  the  next  year  they  were  at  £  1350.  There 
were  624  new  joint-stock  companies  organized  in  Great 
Britain  within  1824-25,  and  the  news  of  vast  profits 
coming  by  every  mail  to  America  fed  the  flame  of  home 
speculation.  Moreover,  the  corporations  which  were 
already  under  way  in  the  United  States  paid  profits 
which  might  well  have  driven  ordinary  people  into 
mild  insanity.  From  five  to  ten  per  cent  semiannual 
dividends  were  repeatedly  declared  by  Insurance  Com- 
panies, and  strangely  enough  they  kept  up  this  pace 
year,  by  year.  In  1828  the  Ocean  Insurance  Company 
of  New  York  netted  the  holders  of  its  stock  twenty 
per  cent.  The  American  Insurance  Company,  likewise 
a  Manhattan  institution,  paid  twelve  per  cent  each  half- 
year,  and  in  '29  declared  a  fifteen-per-cent  semiannual 
dividend.  Items  of  this  character  were  copied  from  one 
journal  to  another,  and  disposed  all  who  had  money  to 
seek  equally  promising  investments.  When  the  railroad 
movement  began,  the  country  was,  therefore,  fully  pre- 
pared to  help  it  on.  State  legislatures,  eager  to  avoid  tax- 
ation and  to  aid  internal  improvements,  also  availed  them- 
selves of  the  tendencies  of  the  times,  and  issued  bonds 
by  the  million.  By  1838  there  were  at  least  one  hun- 
dred and  seventy-five  millions  of  these  securities,  —  sixty 
millions  for  banks,  forty  millions  for  railroads,  fifty  mil- 
lions for  canals,  and  the  rest  for  turnpikes,  etc.  All 
these  bonds  found  their  way  first  or  last  to  the  New 
York  Stock  Exchange.  The  brokers  also  had  their  hand 


BEFORE   1837.  293 

upon  all  the  new  railroad  stocks,  bank  scrip,  and  the 
shares  of  all  sorts  of  minor  companies.  In  1870  Wall 
Street  does  more  than  two  hundred  times  the  business 
that  was  then  carried  on.  But  considering  their  capital, 
the  brokers  of  thirty-five  or  forty  years  ago  were  wide- 
awake men.  There  were  king  operators  in  those  days. 
Samuel  J.  Beebe  was.  one  of  them.  J.  W.  Bleecker  was 
another.  Jacob  Barker  was  very  famous.  He  was 
always  ready  to  lend  money  on  good  collaterals,  doing 
it  through  the  New  York  Exchange  Bank,  which  the 
brokers  called  Jacob's  Bank.  His  transactions  in  United 
States  Bank  were  often  immense.  Nicholas  Biddle  and 
his  operations  in  the  same  stock  are  already  history.  The 
last  week  of  March,  1833,  closed  one  of  his  campaigns. 
The  street  was  heavily  short  of  bank  stock,  which  had 
been  sold  down  to  102.  As  the  day  of  settlement  ap- 
proached there  were  frantic  efforts  to  break  the  market 
The  bears  flooded  New  York  with  sensation  rumors.  Pres- 
ident Jackson's  proclamation  was  surreptitiously  obtained 
and  published.  It  was  all  in  vain.  Up  went  United 
States  Bank  to  110- 111, and  "the  street"  lost  $350,000. 

In  '34  Biddle  created  an  artificial  pressure  by  calling 
in  his  temporary  advances  to  the  banks.  The  Jackson 
organs  claimed  that  it  was  in  order  to  coerce  Congress. 
By  July  the  stringency  in  money  reached  its  climax, 
and  thereafter  the  bank  loans  rose  from  forty-seven  to 
sixty-three  millions. 

The  next  time  that  the  bears  availed  themselves  of 
Jackson,  it  was  with  a  far  different  result.  The  Pres- 
idential attack  soon  told  heavily  upon  all  descriptions 


294  MEN   AND   MYSTERIES   OF  WALL   STREET. 

of  securities.     Subjoined  is  a  partial  table  of  the  rapid 
depreciation :  — 

1833.  1834. 

August.        December.         Jan.  3.        Jan.  17. 

Life  &  Trust  Co.   .        .  .160  1391 

Mohawk  &  Hudson  E.  R.  .  136  101  \            80              94 

Del.  &  Hudson  Canal ..  .     125%  99              91               73 

Boston  &  Prov.  R.  R.         .  lllf  92              90              89 

Saratoga  Railroad         .  .     128  108£           105             103 

Morris  Canal  &  Bank  Co.  .  88  41 

Harlem  Railroad    .         ..95  70 

By  January  25th  stocks  were  still  lower.  The  money- 
market  was  exceedingly  stringent.  Failures  among 
brokers  were  frequent,  and  one  house  suspended  with 
liabilities  amounting  to  eight  hundred  thousand  dollars. 
In  1835,  as  was  intimated  in  a  previous  chapter, 
everybody  played  high  cards  in  the  street.  The  Stock 
Board  suspended  twice.  The  "corners"  of  that  year 
have  not  been  equalled  since  for  audacity.  When  the 
pressure  on  Harlem  occurred,  it  is  alleged  that  the 
United  States  Branch  Bank  helped  to  tighten  the  screws 
by  making  a  sudden  demand  on  the  Manhattan  (or,  as 
the  brokers  called  it,  the  British  Marquis)  Bank  for 
$  400,000  in  specie.  That  bank  drew  on  others ;  the 
purse-strings  closed  and  it  was  impossible  to  borrow 
money.  The  subjoined  contrast  of  'a  few  stocks  will 
illustrate  the  activity  of  the  market  at  this  period :  — 

Nov  25,  '34.  April  25,  '35. 

Morris  Railroad   ....       70  201 

Harlem  Railroad       ...  64  105 

Dry  Dock  Bank   ....     118  145 

Del  &  Hudson  Canal  72  113 


BEFORE   1837.  295 

When  the  great  fire  of  December  broke  out  and  burnt 
the  old  Merchants'  Exchange,  where  the  Stock  Board 
met,  there  were  several  heavy  speculative  movements 
under  way,  and  it  was  deemed  indispensable  to  save 
the  records.  One  brave  fellow  went  in  among  the 
blazing  rafters,  seized  the  big  iron  box,  where  they 
were  kept,  and  bore  it  safely  out.  The  Board  voted 
a  generous  reward  at  its  very  next  meeting. 

Not  the  least  interesting  feature  of  that  time  was  the 
prevalence  of  human  weakness,  incident  to  the  desire 
for  money.  Early  in  the  year  there  was  a  movement 
in  favor  of  enlarging  the  capital  stock  of  Harlem.  The 
lobby  went  up  to  Albany  in  force.  On  April  16th  the 
bill  came  before  the  Senate,  and  a  Mr.  Kemble  made 
a  vigorous  speech  in  opposition.  The  next  day  the 
lobby  returned  to  New  York  by  boat,  fully  convinced 
that  the  measure  had  failed.  The  news  reached  Wall 
Street,  and  Harlem  bounded  up.  At  the  top  of  the 
market  a  broker,  whose  name  has  not  been  caught  up 
by  the  amber  of  history,  sold  800  shares.  His  princi- 
pal was  Kemble,  who  had  despatched  a  message  with 
the  order  by  the  same  boat  which  had  borne  the  an- 
nouncement of  the  death  of  the  bill.  There  were  no 
telegraph-wires  in  those  days,  and  on  the  16th,  while 
his  Harlem  was  selling  off  in  the  city,  Kemble  resus- 
citated the  measure  at  Albany,  and  carried  it  through 
by  a  handsome  majority.  Only  four  persons  under- 
stood this  keen  manoeuvre,  which  even  James  Fisk, 
Jr.,  must  allow  was  contemptible,  seeing  that  Kem- 
ble's  profit,  all  told,  amounted  to  only  $2,239!  Do- 


296  MEN  AND   MYSTERIES   OF  WALL   STREET. 

ing  business  in  such  a  small  way,  it  was  among  the 
sure  eventualities  of  life  that  he  should  be  discovered. 
The  four  men  who  were  in  the  secret  were  Kernble, 
his  broker,  Bishop,  also  of  the  Senate,  and  H.  Bartow, 
Cashier  of  the  Albany  Commercial  Bank.  The  latter 
placed  the  resources  of  his  institution  at  the  command 
of  Kemble  and  Bishop.  False  entries  were  made,  losses 
were  covered  up,  and  by  October  of  this  year  the  firm 
of  Kemble  &  Bishop  had  managed  to  speculate  away 
in  Long  Island  and  Harlem  some  $  130,000.  Natu- 
rally the  bank  was  also  a  sufferer  to  just  this  amount, 
and  the  sleepy  directors  finally  discovered  the  deficit. 
Bartow,  the  defaulter,  was  arrested.  The  Legislature, 
in  fierce  indignation,  held  a  court  of  investigation,  and 
Kemble  was  expelled  from  the  Senate.  Bishop,  mean- 
while, had  prudently  resigned. 

What  is  encouraging  in  this  story  is  the  action  of 
the  Legislature ;  but  even  here  tradition  is  so  far  un- 
kind as  to  attribute  it  quite  as  much  to  partisanship 
as  to  higher  motives,  the  Jackson  papers  declaring  that 
it  was  a  subterfuge  of  the  Federals  in  order  to  gain  two 
fresh  votes  in  the  Senate.  Shall  we  believe  this,  and 
relinquish  all  faith  in  a  Golden  Period  of  Statesman- 
ship ?  Judging  from  other  facts,  mankind  was  certainly 
not  much  better  then  than  now.  There  was  Federal 
Dr.  Watkins,  who  defaulted,  about  this  time,  for  five 
thousand  dollars  of  government  money,  and  a  Jackson 
land-officer  out  West,  who  failed  to  account  for  sixty- 
three  thousand  dollars  belonging  to  the  nation.  In 
'27,  Kane,  Secretary  of  the  National  Insurance  Com- 


BEFORE   1837.  297 

pany,  lost  sixty  thousand  dollars  one  Christmas-eve, 
at  the  gambling-table,  and  the  next  day  the  directors 
discovered  his  account  short  $180,000.  They  threw 
him  into  prison,  and  the  following  morning  he  was 
found  dead.  His  mistress  revelled  in  dresses  and 
jewelry;  and  when  the  officers  of  the  law  swooped  down 
upon  her  sinful  luxury,  they  seized  a  jingling  purse  out 
of  which  rolled  some  five  thousand  Spanish  dollars. 
Then  there  were  Eathbun  of  Buffalo,  and  Wilding,  and 
shoals  of  lesser  defaulters. 

The  men  of  those  days  knew  everything.  At  the 
Stock  Board  "washing"  was  a  frequent  artifice.  One 
day  the  members  detected  this  in  a  transaction  upon 
Catskill  Eailroad  shares.  The  offending  brokers,  named 
respectively  Tolman  and  Eobinson,  were  compelled  to 
discover  their  principals.  Each  gave  the  name  of  Alex- 
ander Hamilton,  the  son  of  New  York's  greatest  states- 
man !  This  was  in  May,  1832.  In  Augusta,  Georgia,  a 
corporation  was  chartered  with  the  condition  that  no 
stockholder  should  own  more  than  forty  shares.  Six 
lawyers  formed  between  each  other  forty-eight  firms,  and 
subscribed  for  $  400,000  of  stock.  There  was  fierce  ex- 
citement, penetrating  to  the  remotest  plantations.  Finally 
the  courts  took  hold  of  it,  and  the  lawyers  were  non- 
suited. We  might  fill  a  dozen  pages  with  like  incidents. 

Speculation  was  running  riot  up  and  down  the  whole 
country.  Maine  was  delirious  over  gigantic  land-schemes. 
All  through  the  West  the  national  government  was  selling 
its  public  domain,  and  the  farmer  dropped  his  plough- 
share to  speculate  in  yet  untilled  fields.  The  Land 

13* 


298  MEN  AND   MYSTERIES   OF  WALL   STREET. 

Office  at  Washington  sold  forty  millions'  worth  of  the 
public  territory  between  '35  and  '36.  Purchasers  paid 
cash  to  the  utmost  extent  of  their  resources.  The  gov- 
ernment agents  deposited  the  money  in  local  banks. 
Then  the  land-buyers  came  in  as  borrowers,  giving  their 
note,  and  putting  the  loan  into  still  fresh  property.  And 
this  process  continued  until  the  utmost  limit  of  credit 
had  been  passed.  Chicago  imported  wheat  from  Europe, 
paying  twenty-two  dollars  for  a  barrel  of  flour.  The 
entire  agricultural  population  almost  forgot  seed-time 
and  harvest  in  its  haste  for  sudden  riches.  Mean- 
while commerce  itself  was  under  high  pressure.  An 
unlimited  chain  of  credits  stretched  from  London  bank- 
ers to  New  York  importers,  thence  to  jobbers,  to  the 
rural  retailers,  and  on  to  farmers,  who  trusted  in  the 
crops  which  they  hardly  deigned  to  cultivate.  In  '36 
this  perilous  condition  of  affairs  reached  its  climax. 
Finance  was  at  the  mercy  of  the  skies.  Twenty  days 
of  excessive  rain,  twenty  days  of  insufficient  sunshine, 
would  destroy  the  harvest  on  which  the  whole  sequence 
of  trade  relations  depended.  The  rain  came,  the  sun- 
shine did  not  come ;  and  the  failure  of  harvest,  height- 
ened by  the  diminished  area  of  cultivation,  plunged 
America  and  Europe  into  the  panic  of  '37.  The  West 
failed  for  hundreds  of  millions.  The  real-estate  bubble 
burst  in  a  day.  In  New  York  one  merchant  who  had 
speculated  madly  in  land  saw  his  danger  on  the  very 
edge  of  the  storm,  risked  and  lost  a  million  and  a  half  of 
dollars,  and  came  forth  into  the  calm  of  '38  with  the  bulk 
of  his  wealth  intact. 


BEFORE   1837.  299 


CHAPTEE    XVI. 

FROM   '37   TO   '60. 

THE  Stock  Market  had  only  an  incidental  connection 
with  the  crash  of  '37.  That  event  was  purely 
commercial  in  character,  but  its  consequences  penetrated 
deeper.  All  over  the  country  the  banks  closed  their 
doors.  The  first  suspension  was  on  the  llth  of  May. 
In  three  years  sixty  banks  sank  from  sight,  dragging  one 
hundred  and  thirty-two  million  dollars  into  the  vortex. 
Everybody  was  bankrupt,  and,  in  the  settlement  of  debts, 
out  of  $440,000,000  the  creditor  class  could  only  realize 
about  one  cent  in  the  dollar,  the  rest  disappearing  in  col- 
lectors' fees,  brokers'  commissions,  and  the  costs  of  courts, 
lawyers,  and  juries.  The  States  came  to  the  rescue.  Stay 
laws  were  passed.  Insolvent  banks  were  allowed  to  is- 
sue inconvertible  bills,  by  special  enactment.  The  paper 
epoch  having  once  set  in,  half  the  legislatures  busied 
themselves  in  creating  a  vast  bonded  indebtedness. 

New  York  City,  at  this  stage  of  the  crisis,  undertook 
two  offices.  Its  banks  determined  upon  resumption; 
its  great  bankers  and  brokers  undertook  to  float  the 
new  State  securities  upon  the  market. 

Old  Sam  Ward  was  a  leading  mind  in  the  former 
movement.  He  was  a  hard-money  man,  and  thoroughly 
hated  suspension.  James  Gore  King,  his  partner,  was  a 


300  MEN   AND   MYSTERIES   OF  WALL   STREET. 

congenial  spirit.  In  London  the  latter  had  the  reputa- 
tion of  a  Midas.  Representing  to  the  directors  of  the 
Bank  of  England  the  urgent  necessity  for  immediate 
action,  he  succeeded  in  borrowing  the  equivalent  of 
$  5,000,000  in  specie.  This  formed  the  basis  for  a  return 
to  coin  payments.  In  season  and  out  of  season,  the  tire- 
less presence  of  Ward  strengthened  faltering  managers, 
and  encouraged  them  to  withstand  the  immense  pressure 
of  the  outside  cities,  whose  paper  currency  would  neces- 
sarily be  affected  by  gold  resumption  in  New  York.  Gal- 
latin  resigned  the  Presidency  of  the  Bank  of  Commerce. 
Sam  Ward  promptly  accepted  the  invitation  to  fill  the 
vacancy.  It  was  a  perilous  position,  and  he  stood  to  his 
work  night  and  day.  The  walls  of  the  bank  had  been 
newly  plastered.  Partly  from  overwork,  partly  from  this 
subtle  dampness,  the  inflammatory  gout  with  which  he 
was  afflicted  became  intensified.  All  through  the  spring 
of  '39  he  fought  the  disease  within  and  the  clamor  for 
suspension  that  came  up  from  without.  In  July  his  doc- 
tors told  him  there  was  no  hope  unless  he_  paused  in- 
stantly. Then  he  yielded,  and  sought  rest  in  Newport. 

When  the  history  of  money-marts  is  fully  told,  there 
should  be  a  chapter  upon  money  martyrs.  The  inde- 
fatigable member  of  the  great  house  of  Prince,  Ward, 
&  King  was  fated.  The  Philadelphia  banks,  after  some 
ineffective  efforts  at  solvency,  had  suspended.  They  now 
threatened  New  York  with  instantaneous  ruin,  if  it  did 
not  imitate  their  example.  Back  from  Newport,  over 
the  painful  turnpike-roads,  came  the  President  of  the 
Bank  of  Commerce.  His  return  infused  confidence.  All 


FROM   '37   TO   '60.  301 

the  other  directors  agreed  to  stand  by  their  positions,  and 
in  a  great  meeting,  in  a  certain  historic  parlor,  each  bank 
in  turn  pledged  itself  to  pay  gold  over  the  counter  to 
the  last  dollar.  Then,  at  last,  Old  Sam  Ward,  having 
won  his  victory,  went  back  to  his  island  retreat,  took  to 
his  bed  instantly,  and  died  within  a  few  weeks.  He  had 
sacrificed  himself  to  resumption  ! 

While  the  clink  of  silver  and  gold  was  heard  in  city 
vaults,  down  in  the  door-guarded  mysteries  of  the  Stock 
Exchange  the  brokers  were  selling  Michigan's,  Louisi- 
ana's, Mississippi's,  and  other  bonds,  which  had  been 
created  by  legislatures,  in  order  to  buoy  up  the  paper 
notes  of  their  local  banks,  —  paper  floated  upon  paper. 
Some  of  these  securities  were  already  stale  at  the  Board. 
Tradition  is  obscure  concerning  the  secrets  of  many  of 
the  older  bonded  issues,  but  there  is  good  reason  for  be- 
lieving that  in  some  few  cases  the  States  were  victims  to 
the  shrewdness  and  unscrupulousness  of  New  York  cap- 
italists. Thus,  Indiana  credited  the  Morris  Canal  Com- 
pany with  a  million  of  its  bonds,  and  when  that  great  cor- 
poration failed,  the  State  had  not  a  dollar  to  show  for  its 
indebtedness.  Michigan  let  the  same  company  have  five 
millions.  The  United  States  Bank  took  these  bonds  as 
collaterals,  and  placed  them  in  the  French  and  English 
markets.  Michigan  claimed  that  it  had  risked  everything 
and  gained  nothing.  Illinois,  Arkansas,  Florida,  Pennsyl- 
vania, Mississippi,  had  each  a  similar  tale.  To  penetrate 
into  the  real  truth  of  all  this  bond  business  would  now 
be  next  to  impossible.  There  is  no  question  but  that  Wall 
Street  made  and  lost  a  vast  deal  of  money  through  them. 


302  MEN  AND   MYSTERIES   OF  WALL   STREET. 

Eventually,  as  we  all  know,  repudiation  set  in,  and  as  a 
large  proportion  of  the  securities  had  found  their  way 
across  the  water,  the  financial  reputation  of  the  country 
received  a  serious  blow.  At  least  one  hundred  and  fifty- 
four  millions,  lent  the  South  and  West  by  England  and 
the  Eastern  States,  were  thus  lost.  Especially  in  respect 
to  the  Mississippi  bonds,  foreign  opinion  was  outraged ; 
and  whatever  may  have  been  the  defence  of  other  States, 
the  action  of  the  Mississippi  Legislature  was  certainly 
flagrant  enough  to  merit  all  the  outburst  of  sarcasm  and 
contempt  with  which  it  was  visited.  The  story,  in  brief, 
was  as  follows :  The  crisis  of  '37  had  nearly  ruined  the 
country.  Mississippi,  in  particular,  was  a  community  of 
paupers.  Everybody  wanted  money.  The  planters  were 
at  the  last  extremity  for  need  of  it.  Finally,  the  State 
voted  five  millions  of  bonds  as  a  basis  for  a  State  Bank. 
The  directors  of  the  newly  chartered  institution  came  at 
once  to  New  York  to  sell  the  securities.  There  was  not 
a  respectable  house  to  be  found  which  would  take  them 
short  of  ten  per  cent  discount.  Then  they  crossed  over 
to  Philadelphia.  Mr.  Biddle  received  them  warmly,  and 
agreed  to  take  the  issue  at  par,  provided  the  bonds  were 
made  payable  in  London,  at  the  rate  of  4  s.  6  d.  to  the 
dollar.  They  were  to  have  a  million  in  specie,  three 
million  eight  hundred  and  fifty  thousand  dollars  in  ex- 
change on  New  Orleans,  and  one  hundred  and  fifty  thou- 
sand dollars  in  notes  of  the  Merchants'  Bank  of  the  same 
city.  This  was  to  be  paid  in  instalments,  beginning  No- 
vember, '38,  and  closing  July,  '39.  The  bargain  was 
concluded ;  and,  on  receiving  the  securities,  the  United 


FROM   '37  TO   '60.  303 

States  Bank  immediately  forwarded  them  to  the  great 
house  of  Hope  &  Co.,  Amsterdam,  who  sold  them  all 
over  Europe.  The  money  thus  obtained,  and  lent  freely 
to  planters  and  merchants,  restored  Mississippi  to  more 
than  its  old  prosperity.  The  State  Bank,  at  Jackson, 
having  been  managed  with  an  imbecility  passing  belief, 
subsequently  failed,  throwing  the  whole  weight  of  the 
indebtedness  on  the  people.  Then,  for  the  first  time,  Mis- 
sissippi discovered  that  it  had  been  unjustly  dealt  with. 
A  pamphlet  was  put  forth  containing  the  best  illustra- 
tion of  the  Pogram  style  that  is  to  be  found  in  our  polit- 
ical literature.  Amid  its  abounding  rhetoric  the  only 
semblance  of  an  excuse  for  the  repudiation  which  it  pur- 
ported to  defend  was  that,  in  establishing  the  rate  of 
sterling  payment,  a  slight  percentage  below  par  had  re- 
sulted !  The  best  answer  to  this  document,  —  beyond 
question  the  most  scandalous  publication  in  the  financial 
or  political  history  of  the  world,  —  was  made  by  the  Dem- 
ocratic Review,  whose  national  politics  were  those  of  the 
repudiators.  That  able  periodical  proved,  by  unimpeach- 
able figures,  that  the  Jackson  Bank  had  actually  realized 
on  the  sale  of  bonds  the  sum  of  $  5,086,667.19,  every 
dollar  of  which  had  been  in  use  in  Mississippi  ! 

European  publicists  were  unbounded  in  invective  over 
the  gigantic  swindle;  but  English  anger  became  sud- 
denly diverted  to  Pennsylvania,  whose  Legislature  soon 
after  imitated  the  example  of  its  Western  sister  by 
wholesale  repudiation  of  its  own  securities.  The  keen 
sarcasms  of  Sydney  Smith  upon  America  are  still  read 
by  thousands  in  this  country  who  have  quite  forgotten 


304  MEN  AND   MYSTEPJES   OF   WALL   STREET. 

the  circumstances  which  inspired  them.  Nor  can  there 
be  much  profit  in  recurring  to  the  dreary  scandal  and 
shame  of  that  time.  It  is  sufficient  to  know  that  by 
'44,  Pennsylvania,  Maryland,  Florida,  Louisiana,  Missis- 
sippi, Illinois,  Indiana,  Michigan,  and  Arkansas  were  all 
delinquent  in  meeting  their  indebtedness.  The  banks 
which  they  had  coddled  and  fattened  with  bonds  were 
all  bankrupt,  owing  more  than  a  hundred  millions.  Such 
of  the  States  as  sought  to  partially  retrieve  their  honor 
found  that  it  could  only  be  accomplished  by  a  payment 
of  double  their  loans,  so  effectively  was  their  credit 
shattered.  At  the  Stock  Exchange  the  securities  were 
quoted  so  low  that  only  the  most  reckless  of  speculators 
would  touch  them,  and  Wall  Street,  whatever  may  have 
been  its  previous  gains,  preferred  the  worst  of  railroad 
stock  to  the  best  of  the  repudiated  fancies.  How  con- 
siderably brokers  had  been  victimized  by  the  immense 
fluctuations  in  these  State  debts  was  curiously  proved  in 
1840.  Upon  a  vote  of  inquiry  it  was  ascertained  that 
year  that  the  treasury  of  the  Board  held  $20,000  in 
accumulated  fines.  This  sum  was  at  once  distributed 
among  sitting  members  as  a  loan  without  interest,  and 
not  to  be  called  in  except  after  sixty  days'  notice.  Only 
ninety-one  members  were  entitled  to  a  share  in  the 
division.  Of  these,  twelve  alone  had  escaped  failure  in 
the  previous  five  years.  Thirty  had  suspended  in  the 
fall  of  '39. 

It  is  an  interesting  fact  that  while  popular  loans  were 
thus  universally  discredited,  the  United  States  Stocks 
invariably  sold  above  the  market.  At  the  height  of 


FROM   '37   TO   '60.  305 

speculative  distrust,  some  three  millions  and  a  half  of 
Sixes,  coming  suddenly  upon  the  public,  were  bought  up 
in  a  day  at  103. 

For  the  succeeding  decade  the  history  of  the  Stock 
Exchange  is  that  of  railway  interests.  But  to  enter 
upon  the  details  of  that  movement  would  absorb  space 
which  will  be  filled  more  to  the  satisfaction  of  the 
reader  in  a  description  of  the  first  great  share  panic  in 
New  York.  This  dates  with  1853-54.  All  the  principal 
main  lines  of  to-day  were  by  that  time  on  the  share 
list.  For  ten  years  there  had  been  a  plethora  of  money. 
California  poured  an  incessant  tide  of  wealth  into  the 
city,  and  intensified  the  speculative  fever.  Brokers 
grew  rich  on  all  sides.  The  attractions  of  the  market 
drew  in  poets,  historians,  novel-writers,  doctors,  and 
lawyers.  Bids  and  offers  resounded  from  curb  to  curb 
at  nightfaU.  The  old  code  of  1820  was  still  in  force. 
Membership  cost  $400.  The  Vice-President's  salary 
was  $  2,000.  Many  people  preserved  the  ancient  habit 
of  keeping  personal  records  of  the  daily  sales  at  the 
Exchange,  and  the  books  containing  these  entries  were 
always  to  be  found  in  every  important  office  for  the 
inspection  of  customers.  Every  month  there  were  acces- 
sions to  the  ranks.  Moreover,  the  "  outside  "  Board  was 
becoming  a  power.  There  were  two  hundred  "regular" 
brokers;  but  the  irregular,  curbstone,  outside  phalanx 
was  far  more  numerous.  They  leased  a  room  below  the 
Stock  Exchange,  and  constant  communication  was  kept 
up  between  the  rival  bodies.  The  New  York  Herald,  be- 
twixt jest  and  earnest,  asserted  that  the  curbstone  men 


306  MEN  AND   MYSTEEIES   OF  WALL   STEEET. 

were  held  in  better  repute  ir^  master  of  contracts  than 
their  competing  brethren. 

The  banks  aided  speculation  with  a  free  hand.  Brokers 
with  only  $  1,500  on  deposit  would  draw  checks  for 
$  100,000  or  even  $  300,000  which  were  promptly  cer- 
tified by  paying  tellers.  From  '51  to  '53  twenty-seven 
new  banks  had  been  organized  in  the  city.  Hence  com- 
petition, a  relaxation  of  the  scrutiny  of  securities,  and  an 
eagerness  for  call  loans.  The  weekly  average  of  loans, 
or  promissory  notes  and  stocks,  was  from  ninety-five  to 
a  hundred  millions.  Even  the  staid  conservative  banks 
lent  money  freely.  In  June,  '53,  Hunt's  Merchant's 
Magazine  sung  a  paean  over  the  fiscal  year  which  had 
just  closed.  "In  commercial  activity,  and  in  wide- 
spread prosperity,"  it  cried,  "it  has  never  been  equalled 
since  the  formation  of  the  Federal  Union." 

July  followed,  and  the  sky  was  still  bright.  Six  per 
cent,  or  at  lowest  five  per  cent,  was  current  interest 
in  New  York,  while  in  London  capital  could  not  com- 
mand more  than  one  and  a  half  or  two  per  cent  per 
annum.  England,  therefore,  forgot  its  old  fears,  and 
had  again  become  a  buyer.  It  absorbed  our  govern- 
ments, and  such  stable  State  securities  as  those  of  New 
York  and  Massachusetts.  Then  it  began  to  purchase 
railroad  bonds.  In  those  days  railway  companies  issued 
enough  stock  to  pay  for  right  of  way,  and  then  put  forth 
bonds  to  cover  the  expense  of  construction.  The  London 
capitalists  took  the  best  of  these  bonds.  The  home  pub- 
lic bought  the  second  class,  and  in  short  any  class.  Mer- 
chants, everybody,  invested,  holding  all  they  could  carry 


FROM   '37  TO   '60;  307 

upon  margins.  The  money-centres  of  the  seaboard  were 
overburdened  by  a  surfeit  of  gold.  Deposits  were  on 
the  increase.  They  fluctuated  from  forty-nine  to  fifty 
millions,  rising  sometimes  even  higher.  Naturally  the 
banks  were  made  unduly  confident,  and  were  prepared 
to  loan  on  almost  any  description  of  paper.  Half  the 
houses  in  foreign  trade  had  their  capital  in  bonds.  Some 
even  invested  three  times  their  real  capital,  hypothe- 
cating as  fast  as  they  bought,  and  drawing  nine,  eight, 
or  seven  per  cent  interest  on  securities,  which,  as  col- 
laterals, could  procure  loans  at  four  per  cent.  Clerks 
who  could  not  raise  even  a  hundred  dollars  freely 
speculated,  and  brokers  took  their  orders  without  ques- 
tion, so  absolutely  plentiful  were  loans. 

Meanwhile  there  was  the  shadow  of  a  war-cloud  over 
Europe.  English  bankers  became  timid,  and  sent  their 
securities  to  Xew  York  for  realization.  Breadstuffs  went 
up,  alarming  London  capital  still  more.  Money  in  the 
metropolis  caught  the  alarm.  Deposits  decreased.  Heavy 
importations  came  due,  and  the  United  States  Treasury 
was  filled  with  specie  accumulating  from  the  receipts  of 
the  Custom-House.  By  August  the  banks  had  reached 
the  point  where  an  immediate  calling  in  of  loans  was  in- 
dispensable. For  a  month  the  speculative  element  at- 
tempted to  breast  the  tide ;  but  the  bears  were  in  the 
street,  stocks  fell  ten  per  cent  a  day,  it  was  impossible  to 
make  good  the  money  which  they  had  borrowed.  The 
banks  were  left  with  a  vast  load  of  shares  and  bonds, 
every  day  diminishing  in  value.  The  subjoined  table 
illustrates  the  depression  in  some  of  the  steadier  classes 
of  stock :  — 


308  MEN  AND   MYSTERIES   OF  WALL   STREET. 

Panama,  Jan.  1, '53=140;  Julyl=122i;  Septl— 108;  Dec.  1=96 
6th  Av.RE.,  Apr.  1=120          "      118  "      109$         «      98 

Del.  &  Hudson  Canal  Co.        "      120J          «      118  "    104J- 

Harlem  ..."        65  "56  "      55f 

Hudson       ...  «       72£          «        68f         "      671 

Erie         ...-."       80  "        74£ 

The  Parker  Vein  Coal  Co.,  among  the  "fancies/'  was 
67  on  the  first  day  of  the  year.  In  June  it  was  32 ;  in 
August,  20;  in  December,  7|.  Erie,  in  this  exhibit, 
presents  a  firmer  front  than  either  Hudson  or  Harlem. 

If  the  merchants  of  New  York  in  this  year  1870  wish 
to  warn  the  banks  against  call  loans,  by  which  our  pres- 
ent mercantile  trade  is  imperilled,  let  them  organize 
a  subscription  for  an  accurate  history  of  banking  in  the 
metropolis  during  1853-54.  The  directors  of  the  lending 
banks,  with  all  their  capital  out  in  advances,  and  the  cash 
deposits  perceptibly  decreasing,  saw  themselves  on  the 
brink  of  failure  unless  they  continued  to  lend  on  doubt- 
ful security  or  sold  this  dead  weight  of  bonds.  When 
they  went  into  the  market,  however,  they  suddenly  dis- 
covered their  dilemma.  The  Stock  Exchange  may  almost 
be  said  to  have  disappeared.  All  that  excited  buying 
and  selling,  that  maelstrom  of  contending  passion,  that 
whirl  and  tide  of  money-getting,  had  vanished  as  if  in  a 
dream.  Wall  Street  was  as  sombre  as  a  plague-stricken 
city.  Brokers  flitted  in  and  out  like  uneasy  ghosts. 
The  outside  speculative  world  had  shrunk  back  aghast : 
and  the  brokers  only  operating  upon  margins  were  like 
an  army  despoiled  of  its  implements  of  warfare.  Be- 
yond their  margins,  their  only  capital  was  their  credit, 
—  the  banks  were  their  capital ! 


FKOM   '37   TO   '60.  309 

Nothing  saved  the  banks  in  this  crisis  but  the  good 
fortune  of  the  great  merchant  houses.  Neither  jobbers 
nor  wholesale  firms  who  had  limited  themselves  to  legiti- 
mate trade  suffered.  The  demand  for  breadstuffs  abroad 
had  given  an  impetus  to  commerce,  and  in  the  agricultural 
sections  the  retail  trade  was  rich,  and  made  constant 
remittances.  Confidence  was  restored.  Deposits  again 
became  heavy,  the  specie  balance  was  favorable,  and  by 
private  sale  or  by  reasonable  extensions  of  credit  the 
banks  succeeded  in  relieving  themselves  of  their  burden. 

The  end,  however,  was  not  reached.  The  spring  trade 
of  '54  opened  gloomily.  Large  quantities  of  goods  were 
slaughtered  in  auction-rooms.  In  June  it  was  discovered 
that  the  Parker  Vein  Company  had  flooded  the  market 
with  an  immense  and  unauthorized  issue  of  stock.  The 
first  of  the  next  month  New  York  was  startled  by  the 
intelligence  that  Eobert  Schuyler,  President  of  the  New 
York  and  New  Haven  Eailroad,  had  been  selling  some 
20,000  illegal  shares  at  par,  —  and  was  now  a  defaulter 
for  two  millions.  Almost  simultaneously  it  was  ascer- 
tained that  Alexander  Kyle,  Secretary  of  the  Harlem 
Eailroad  Company,  had  made  an  issue  of  forged  stock  to 
the  amount  of  $300,000.  Other  developments  of 
breaches  of  trust  came  flocking  from  the  inland  cities. 
A  fierce  panic  filled  the  air.  Clerks,  accountants,  bank- 
officers,  were  all  under  suspicion. 

It  was  the  time  of  the  year  when  the  "solid"  men 
were  out  of  town  on  vacations.  The  banks,  again  embar- 
rassed, knew  not  which  way  to  turn.  Several  Western 
banks  suspended,  and  a  few  just  established  in  the  city 


310  MEN   AND   MYSTERIES   OF   WALL   STKEET. 

were  forced  to  the  same  course.    The  best  indorsed  paper 
could  not  be  discounted  for  less  than  fifteen  per  cent. 

The  Stock  Exchange  was  the  scene  of  fierce  tumult. 
The  bulls  shivered  and  the  bears  were  jubilant.  It  was 
loudly  asserted  that  the  old-established  banks  had  ex- 
aggerated the  crisis  in  order  to  buy  in  a  cheaper  market. 
Not  merely  "  fancy,"  but  the  most  unquestioned  securi- 
ties felt  the  pressure.  In  Hartford  and  New  Haven 
there  were  capitalists  who  had  ventured  to  make  loans 
in  the  previous  winter,  when  New  York  lenders  had  re- 
fused. They  now  were  weighted  down  with  a  million 
and  a  half  of  bonds,  which  were  selling  in  the  street  for 
almost  any  price.  The  depression  was  enormous,  taking 
the  whole  market  through,  although  we  are  without  a 
basis  for  accurate  estimate. 

Fortunately  it  was  an  epoch  of  great  elasticity.  By 
winter  affairs  assumed  a  more  natural  condition.  In  the 
summer  of  '55  speculation  became  again  buoyant.  The 
West  turned  anew  to  landed  property.  Vast  sums  were 
made  in  town  lots.  Men  bought  in  the  spring,  giving 
their  notes,  and  sold  out  in  November  with  large  mar- 
gins of  gain.  Crops  were  abundant.  Eailroad  earnings 
were  good,  and  the  bulls  took  courage.  For  two  years 
there  were  enormous  fortunes  realized  by  the  capitalists 
who  had  dared  to  buy  in  the  cheap  market  of  '54.  One 
of  the  remarkable  features  of  the  Exchange  was  the  high 
range  of  United  States  securities.  Even  the  panic 
scarcely  affected  them.  All  through  the  vacillations  of 
'53,  six  per  cents  remained  steadfast  between  121|  and 
123.  They  were  exceedingly  sought  after  from  abroad. 


FROM   '37  TO   '60.  311 

Had  government  exhibited  the  same  conservatism  in 
respect  to  other  classes  of  security,  the  shadow  which 
was  shortly  to  descend  upon  the  country  might  have 
been  robbed  of  half  its  gloom.  Congress,  however,  was 
disposed  to  fan  the  speculative  flame.  Unusual  land- 
grants  were  made  to  railroad  companies.  Prominent 
officials  were  more  than  suspected  of  stock  jobbery,  and 
State  legislatures  derived  no  inconsiderable  inspiration 
from  Washington  for  questionable  charters  and  open 
bribery.  Lines  of  roads  were  laid  out  to  suit  the  interest 
of  capitalists,  who  were  not  merely  willing  but  prompt 
to  pay  lobby  agents  for  every  sacrifice  of  public  to  indi- 
vidual advantage.  Bonds  by  the  million  were  guaran- 
teed, and  bonds  by  the  hundred  millions  were  floated  in 
the  market  at  all  possible  shades  of  discount. 

The  great  New  York  operators  varied  their  specula- 
tions according  to  the  opportunities  of  the  market.  But 
the  special  favorite  of  the  time  was  the  old  New  York 
and  Erie.  This  road  was  only  completed  in  '51,  and  its 
finances  were  in  a  comparatively  healthy  condition. 
Daniel  Drew  had  commenced  his  career  as  director  as 
far  back  as  '52,  and  the  broad  gauge  rose  and  fell  with 
magnificent  opportunities  for  gain  under  his  unique 
manipulations.  William  M.  Tweed,  who  had  quit  the 
chair  business  for  a  broker's  office  in  '51,  managed 
within  a  few  months  to  sink  his  little  fortune  in  the 
Erie  maelstrom,  and  his  recent  profitable  connection 
with  Messrs.  Eisk  &  Gould  may  be  ascribed  to  a  natu- 
ral desire  to  retrieve  the  old  reverses. 

Jacob  Little  still  frequented  Wall  Street,  losing  and 


312  MEN   AND   MYSTEEIES   OF  WALL   STKEET. 

winning  with  the  coolness  of  a  veteran  player.  His 
operations  dated  back  to  '34,  and  the  Morris  Canal 
Company  corner  was  one  of  his  brilliant  achievements. 
He  has  the  reputation  of  having  invented  short  sales, 
using  options,  however,  as  the  vehicle  of  his  manipula- 
tions. The  street  was  always  in  conspiracy  against  him, 
frequently  causing  him  heavy  losses,  and  twice  breaking 
him.  Never  was  there  a  bear  so  invincible  in  the  face 
of  defeat.  Other  leaders  were  George  Law,  who  handled 
Panama  deftly ;  and  Dean  Richmond,  who  swayed  the 
fortunes  of  New  York  Central. 

Vanderbilt  was  already  looming  up  upon  the  horizon. 
It  was.  an  epoch  of  giants,  and  the  Stock  Exchange 
reeled  under  the  heavy  blows  of  alternate  bull  and 
bear.  Nelson  Eobinson  was  one  of  the  shrewdest  and 
keenest  operators.  He  had  been  in  "  the  street "  since 
'45,  and  never  made  less  than  $  50,000  a  year  even  in 
his  worst  speculations.  During  '53  and  '54  the  tre- 
mendous vicissitudes  of  stocks  affected  his  nerves.  His 
family  implored,  his  doctor  insisted.  At  last  he  yielded 
and  retreated  into  the  country.  But  it  is  impossible 
for  men  who  have  once  mastered  the  science  of  stock 
manipulation  to  resist  its  allurements.  In  '56  he  re- 
turned. All  the  brokers  welcomed  him.  Erie  and 
Central  felt  the  subtle  presence  of  the  leader.  His 
combinations  were  wonderful.  One  Saturday,  after  a 
week  of  intense  exertion,  he  left  at  night  for  home. 
The  next  day  he  sat  in  his  pew  at  church,  with  his 
brain  feverish  over  new  and  magnificent  projects. 
Friends  congratulated  him,  as  the  congregation  poured 


FROM   '37  TO   '60.  313 

out,  upon  his  healthy  appearance.  Ten  minutes  after 
he  was  struck  by  apoplexy,  and  in  six  hours  was  dead. 
The  times  were  prolific  of  similar  tragedies.  Guano 
speculations,  sugar,  cotton,  land  operations,  sent  men 
into  insane  asylums  or  brought  life  to  a  full  stop.  The 
fever  of  the  day  seemed  to  know  no  limit.  It  pene- 
trated to  the  poultry-yard.  There  were  hen-brokers  in 
New  Orleans,  Boston,  and  London.  A  pair  of  Cochin 
China  fowl  were  valued  at  $  700.  Gray  Chittagongs 
sold  for  $  50.  Slianghaes  commanded  $  100.  One  man 
in  Boston  sold  $  23,000  worth  of  "  fancy  "  poultry  stock 
in  '53.  This  was  the  parody  of  speculation,  but  it  il- 
lustrates even  in  its  absurdity  the  tendency  of  the 
period.  As  many  as  two  hundred  thousand  individuals 
are  said  to  have  been  holders  of  stocks  or  bonds.  All 
the  old  established  roads  paid  handsome  dividends. 
Competing  lines  now  came  into  the  market.  The  ri- 
valry led  to  low  prices.  Some  of  the  railways  were 
built  through  mortgage  bonds  ;  others  by  State,  city,  or 
county  guaranties.  These  were  sold  at  from  five  to  fifty 
per  cent  discount,*  and  the  whole  country  came  forward 
as  buyers.  Agents  crossing  the  Atlantic  with  five  mil- 
lions of  scrip  sold  the  entire  bulk  in  two  months. 

*  In  the  just  irritation  felt  against  railway  directors  for  their  immense 
hydraulic  operations,  by  which  the  capital  stock  of  the  great  trunk  lines 
has  been  "watered  "  to  the  extent  of  $  100,000,000  within  the  past  eight 
or  nine  years,  the  public  should  not  lose  sight  of  the  fact  that  the  origi- 
nal cost  of  railways  was  greatly  enhanced  by  the  difficulty  projectors 
met  with  in  floating  these  bonds  ;  loans,  interest  and  commissions,  ab- 
sorbing a  very  heavy  percentage  of  the  amount  of  money  which  the 
securities  represented  on  their  face. 
14 


314  MEN   AND   MYSTEKIES   OF  WALL   STREET. 

The  banks  helped  forward  the  speculative  mania. 
From  December,  1854,  to  August,  1855,  they  increased 
their  loans  to  the  amount  of  twenty  millions.  From 
February,  1856,  to  August,  1857,  the  daily  credits  ranged 
from  one  hundred  to  one  hundred  and  twenty  two  mil- 
lion dollars.  The  keen  manoeuvres  of  the  Stock  Market 
under  these  happy  auspices  were  beyond  all  precedent. 
Loud  complaints  came  from  England  of  the  scandalous 
bear  manipulations  of  the  street.  The  London  Times 
(July  7,  '57)  thundered  out  anathemas  at  the  New  York 
operators,  who  sought  to  bring  on  a  panic  by  offering  to 
sell  Hudson,  then  quoted  at  89,  for  20,  seller  12  months. 
These  men  lost  hundreds  in  order  to  make  thousands. 
The  action  of  the  New  York  and  New  Haven  Eailroad 
in  repudiating  the  issues  of  Sclmyler  was  as  little  un- 
derstood abroad  as  it  was  relished  by  Vanderbilt  at 
home  ;  and  the  Times  found  language  inadequate  to  ex- 
press its  indignation  of  a  certain  bank  president  who 
borrowed  money  in  England  and  plead  usury  as  an  ex- 
cuse for  non-payment ;  and  of  the  "  pious  "  head  of  an 
American  Trust  Company  who  had  persisted  in  retain- 
ing possession  of  funds  obtained  from  London,  in  order 
to  spend  them  in  years  of  litigation  with  English  share- 
holders. 

This  tendency  toward  sharp  and  unscrupulous  bear 
tactics  was  largely  due  to  the  presence  of  new  men, 
"  known  popularly  as  the  "  Observatory,"  who  had  come 
from  the  West  with  large  accumulations  of  capital,  and 
with  a  predetermination  to  break  the  market.  They 
played  recklessly  and  for  high  stakes.  Nevertheless,  the 


FROM   '37  TO   'GO.  315 

aspect  of  the  financial  sky  was  such  that  everybody 
predicted,  if  not  fair  weather,  yet  nothing  worse  than 
squalls.  Brokers  coolly  quoted  the  slight  downward 
fluctuations  of  stocks  as  proof  that  panic  was  impossible, 
since  it  could  only  originate  from  London,  and  the  capi- 
talists of  that  city  were  not  likely  to  send  back  the 
many  hundred  millions  of  American  securities  which 
they  held  to  certain  sacrifice  in  the  New  York  market. 
The  bears  persisted  in  plying  the  hammer,  but  they  had 
nearly  reached  the  point  at  which  they  proposed  a 
change  of  tactics,  and  a  sharp  advance.  Just  at  this 
stage,  when  the  banks,  —  alarmed  by  the  loan  statement 
of  the  first  week  of  August,  in  total  $122,077,252,— 
called  in  the  comparatively  insignificant  margin  of  a  mil- 
lion, "  the  street "  was  startled  by  the  rumor  of  "  ir- 
regularities "  on  the  part  of  prominent  railroad  officials. 
A  break  of  one  or  two  per  cent  in  some  of  the  more 
active  shares  resulted,  and  the  still  further  decrease  of  a 
million  in  loans  helped  to  give  an  unsettled  aspect  to 
the  market. 

The  state  of  affairs  at  this  critical  juncture  was  briefly 
as  follows :  The  bears  had  depressed  prices  where  they 
were  willing  to  buy,  but  had  not  bought.  The  bulls  had 
been  waging  a  losing  battle  for  months,  and  were  still 
endeavoring  to  carry  a  heavy  weight  of  stocks  which  had 
sunk  below  the  estimates  on  which  they  had  been  hy- 
pothecated, and  were  now  almost  down  to  the  low-water 
mark  of  their  margins.  The  banks  had  lent  money  be- 
yond what  was  safe,  and  were  forced  into  slow  contrac- 
tion, lest  any  sudden  rigidity  should  destroy  not  only 


316  MEN  AND   MYSTERIES   OF  WALL   STREET. 

their  customers  but  the  market  for  their  collaterals.  A 
few  weeks  might  change  everything.  If  no  great  failure 
occurred,  the  danger  could  be  securely  tided  over.  The 
banks  were  generously  cautious.  Brokers  were  endeav- 
oring to  force  stocks  into  a  healthier  position.  It  was 
one  of  those  crises  where  an  inopportune  event  would 
be  only  the  first  step  in  an  immense  succession  of 
disasters. 

Such  an  event  was  a  part  of  destiny.  On  the  24th  of 
August  the  Ohio  Life  Insurance  and  Trust  Company 
closed  its  doors  to  the  public.  This  institution,  with  its 
principal  office  in  Cincinnati  and  a  branch  at  New  York, 
had  been  doing  an  immense  business  in  banking  and 
general  collection  through  the  West.  The  cashier  in  the 
metropolis  had  advanced  large  sums  of  money  on  shares 
and  bonds.  An  imperative  call  on  the  part  of  depositors 
compelled  him  to  insist  upon  the  immediate  return  of 
the  advances  made  to  brokers.  The  latter  could  not 
comply.  The  condition  of  the  market  made  it  impossi- 
ble to  realize  upon  the  securities.  There  was,  therefore, 
no  alternative  but  suspension,  and  the  lowest  estimates 
of  the  failure  were  above  three  millions.*  The  an- 
nouncement came  upon  the  city  like  a  whirlwind. 
Bank  presidents  lost  their  heads.  Loans  were  cut  down 
at  the  rate  of  four  millions  a  week.  Crowds  of  mer- 

*  The  subsequent  closing  of  the  Cincinnati  offices  augmented  the 
liabilities  lo  five  millions.  Much  of  this  was  squandered  illegally  by 
the  managing  trustees,  but  the  exact  facts  were  carefully  concealed 
from  the  public,  from  a  belief  on  the  part  of  stockholders  that  the  truth 
would  only  add  to  the  alarm  while  decreasing  their  chance  of  recovering 
something  from  the  ruin. 


FKOM   '37   TO    '60.  317 

chants  gathered  at  every  discount  day  only  to  have  their 
paper  thrust  back  upon  them  with  scarcely  an  explana- 
tion. The  telegraph  was  spreading  half-truths  and  wild 
rumors  over  the  whole  country.  Journals,  in  the  inter- 
est of  men  who  prey  upon  panic,  caught  up  every  whis- 
per, misstated  and  exaggerated  printed  list  of  failures, 
and  ran  up  their  editions  to  thousands  upon  thousands. 
While  the  commercial  world  was  thus  being  swept  for- 
ward into  illimitable  ruin,  the  storm  had  already  burst 
upon  Wall  Street  and  was  carrying  everything  before  it. 
The  board  wras  like  a  gathering  of  demons.  Bull  and 
bear  came  in  personal  contact,  and  fierce  blows  mingled 
with  the  ceaseless  rapping  of  the  President's  hammer 
and  the  terrible  slaughtering  of  every  description  of 
security.  The  great  mass  of  brokers  found  it  impossi- 
ble to  return  their  loans.  Many  were  swamped  by  time 
contracts.  Dozens  "  broke  "  every  day.  The  whole  talk 
of  the  money  market  was  of  the  rottenness  in  the  con- 
duct of  corporations.  It  was  asserted  that  the  directors 
of  Western  railways  had  been  hiring  funds  at  the  rate 
of  twenty-five  per  cent  per  annum  with  which  to  pay 
dividends,  —  that  one  of  the  best  known  lines  had  been 
drawn  into  an  over-issue  of  stock  to  the  detriment  of 
bondholders  and  in  violation  of  their  charter.  It  be- 
came more  and  more  understood  that  the  collapse  of  the 
Ohio  Trust  Company  was  due  to  wild  advances  to  the 
Cleveland  and  Pittsburg  Eailroad,  and  other  doubtful 
stocks.  Under  the  impetus  of  this  universal  and  justifi- 
able distrust  shares  went  down,  down,  down.  It  was 
impossible  to  borrow  upon  them  except  at  ruinous  usury. 

13* 


318  MEN   AND   MYSTERIES    OF  WALL   STREET. 

Panama  fell  twenty  per  cent  in  four  weeks ;  in  two 
months  it  had  fallen  thirty  per  cent.  Illinois  Central 
dropped  forty-two  per  cent.  Milwaukee  and  Mississippi 
fell  thirty-six  per  cent  in  ten  days.  Erie  declined  twenty 
per  cent,  and  New  York  Central  twenty-four  per  cent. 
Eock  Island  went  down  thirty-four  per  cent  before  it 
turned.  Delaware  and  Hudson  Canal  sunk  in  leaps  of 
twenty  per  cent,  measuring  forty  per  cent  of  decline  by 
October  13th.  Galena  and  Chicago  was  quoted  thirty- 
four  per  cent  lower  in  the  second  week  of  October  than 
in  the  last  week  of  August.  Reading  was  in  the  same 
plight.  Missouri  6s  and  Virginia  6s  both  declined 
twenty  per  cent.  Railway  bonds  went  the  way  of 
stocks.  Bank  shares  had  the  same  fate. 

On  Friday,  September  25th,  the  Bank  of  Pennsylvania 
suspended,  followed  the  next  day  by  the  other  Phila- 
delphia banks.  Baltimore,  Washington,  and  the  lesser 
cities  yielded  to  the  example,  and  by  the  middle  of 
October  the  New  York  banks  had  refused  further  pay- 
ments of  coin.  The  stock-brokers  now  saw  the  oppor- 
tunity for  revenge.  When  the  call  of  banks  began  it 
was  the  signal  of  assault.  The  Bank  of  America  was 
forced  down  thirty-four  per  cent,  the  Bank  of  Commerce 
thirty-five  p«r  cent;  Park  Bank  sold  down  forty-four 
per  cent;  the  Metropolitan,  fifty  per  cent.  A  bank 
whose  shares  a  month  or  two  before  were  at  par  went 
plunging  under  the  auctioneer-gavel  to  thirty-five.  The 
bears  were  gleeful,  and  their  faces  radiant  with  smiles. 

United  States  6s  of  '68  felt  the  effect  of  the  universal 
decline,  and  Howell  Cobb,  then  Secretary  of  the  Treasury, 


FROM   '37   TO   '60.  319 

promptly  came  into  the  market  and  bought  up  several 
millions.  The  savings-banks  which  had  used  govern- 
ments as  the  basis  of  their  business  were  thus  supplied 
with  gold,  and  succeeded  in  withstanding  the  daily  run 
upon  their  resources.  It  is  a  curious  circumstance,  in 
view  of  our  present  Gold  Board,  that  silver  during  this 
period  sold  at  a  discount  for  paper,  and  one  half  of  one 
per  cent  was  the  highest  price  which  gold  reached,  even 
at  the  white  heat  of  the  crisis. 

The  catastrophe  of  '57  illustrates  what  might  have  been 
the  fate  of  the  country  in  '69,  if  the  whole  nation  had  not 
grown  wiser  and  our  banking  community  clearer-sighted. 
The  crash  began  with  the  Stock  Market.  It  would  have 
ended  there,  had  not  two  things  supervened.  The  New 
York  banks  withdrew  eleven  millions  of  loans  in  three 
weeks.  August  22d  they  were  lending  $120,000,000, 
October  24th,  only  $95,500,000.  Such  an  alarming 
shrinkage,  attended  by  the  suspension  of  specie  payments 
and  the  sensationalism  of  the  telegraph  and  daily  press, 
destroyed  confidence  everywhere,  and  threw  the  paper 
of  the  oldest  and  most  reputable  mercantile  houses  into 
the  same  contempt  with  the  certificates  of  rotten  and 
bankrupt  corporations.  But,  in  addition  to  this  cause, 
there  was  another  quite  as  vital  and  as  immediate  in  its 
effects.  The  entire  country  was  in  stocks.  The  farmer, 
the  country  lawyer,  jobbers,  heavy  domestic  dealers,  the 
whole  foreign  trade,  were  more  or  less  holders  of  shares, 
bonds,  county,  city,  or  State  paper.  These  they  used  as 
capital,  drew  therefrom  dividends  or  interest,  raised 
money  for  immediate  needs  by  hypothecation,  and,  in  a 


320  MEN   AND   MYSTERIES    OF   WALL   STREET. 

word,  based  their  business  movements  upon  the  belief 
that  this  property  could  always  be  converted  into  coin 
or  employed  as  collaterals.  The  panic  in  the  Stock 
Market  destroyed  the  former  hope ;  the  panic  in  the 
banks  put  an  end  to  the  latter  anticipation.  The  money 
of  the  West  and  the  Middle  States  had  gone  into  stocks, 
and  stocks  had  now  gone  to  the  dogs. 

In  '69  these  conditions  were  reversed.  The  general 
public  no  longer  held  securities,  with  the  exception  of 
governments.  If  men  bought  it  was  on  margins,  and 
with  the  intention  of  selling  upon  the  first  rise.  With 
ten  per  cent  of  their  capital  they  controlled  the  same 
speculative  profits  which  would  have  been  theirs  if  the 
shares  had  been  bought  out  and  out.  Here  and  there, 
in  communities  comparatively  untainted  by  the  fever 
for  stock  manipulation,  the  certificates  of  local  manufac- 
turing and  railroad  corporations  were  used  as  an  invest- 
ment ;  but  this  description  of  property  neither  constituted 
the  full  bulk  of  assets  nor  was  liable  to  the  ordinary 
fluctuations  of  the  market.  The  preponderating  mass 
of  the  shares  dealt  in  on  the  Stock  Exchange  was  in  the 
street,  passed  from  broker  to  broker,  was  used  by  the 
great  operators  like  the  pawns  in  a  game  of  chess.  The 
September  gold  gale  swept  away  the  margins  of  out- 
side speculators,  but  left  their  remaining  capital  intact. 
Moreover,  the  brokers,  schooled  by  the  artificial  "  lock- 
ups "  of  money  in  the  preceding  year,  were  better  able  to 
resist  the  attack;  and  the  banks,  in  drawing  in  their 
loans,  exhibited  unusual  prudence  and  conservatism. 
The  pressure  in  the  loan  market  continued  only  a  few 


FROM   '37   TO   '60.  321 

days  and  then  sensibly  relaxed.  The  West  suffered  by 
the  decreased  value  of  its  products,  and  merchants  in 
the  foreign  trade  were  temporarily  affected  by  the  con- 
dition of  exchange,  and  the  variable  value  of  the  only 
legal  currency  for  the  payment  of  custom  dues.  The 
spasm  limited  itself  almost  exclusively  to  Wall  Street 
and  to  the  corresponding  speculative  centres  of  Phila- 
delphia, Boston,  and  Baltimore.  Such  stocks  as  had 
genuine  investment  value  were  bought  up  at  once  by 
capitalists  all  over  the  Union,  the  moment  the  line  of 
depression  had  reached  a  point  where  they  could  profit- 
ably be  held.  The  very  fact  of  this  immediate  influx 
of  money  is  a  further  proof  of  the  difference  between 
the  two  crises.  But  it  is  in  the  results  of  '57  that  the 
impropriety  of  its  comparison  to  '69  is  clearly  shown. 
Factories  at  that  period  were  everywhere  shut  up.  Em- 
ployees and  domestic  servants  were  dismissed  by  thou- 
sands. In  New  York  City  alone  twenty  thousand  men 
and  women  lost  their  places  in  a  fortnight.  The  country- 
dealers  found  it  impossible  to  meet  their  indebtedness. 
Liabilities  incurred  when  wheat  was  two  dollars  a  bushel 
were  now  to  be  met  with  wheat  at  seventy-five  cents. 
Merchants,  banks,  all  trades  and  professions,  were  in  sore 
distress.  The  mails  were  weighted  down  by  letters  plead- 
ing for  help.  Twenty  tons  of  these  clamorous  missives 
went  out  of  the  New  York  post-office  in  one  day.  Noth- 
ing but  favoritism  could  secure  help  from  the  banks. 
In°  Philadelphia  a  merchant  who  had  made  ineffectual 
efforts  to  obtain  advances  on  prime  paper  drew  up  a 
thirty  days'  note  for  five  dollars,  went  to  his  neighbors 


322  MEN   AND   MYSTEEIES   OF  WALL   STREET. 

and  secured  sufficient  first-class  indorsements  to  cover 
the  back.  He  then  pinned  on  a  ten-dollar  bill  of  his 
bank  as  collateral  and  presented  it  for  discount.  The 
President  smiled  grimly  at  the  delicate  hint. 

The  press  of  the  time  overflowed  with  anecdotes 
illustrating  the  popular  feeling  against  the  great  finan- 
cial corporations,  and  their  "unjustifiable"  slaughter- 
ing of  collaterals.  A  Chicago  bank  had  ordered  a  lot 
of  corn  which  had  been  hypothecated  to  be  sent  to 
a  house  at  Oswego  for  instant  sale.  As  the  firm  failed 
to  remit  the  money,  the  Chicago  president  concluded 
to  take  a  trip  over  the  railroad  and  inquire  into  mat- 
ters. The  dialogue  which  ensued  upon  his  arrival  is 
thus  stated:  — 

Chicago  Financier.  "  Is  Mr.  H at  home  ? " 

H.  "  That 's  my  name,  sir :  take  a  seat." 

C.  F.   "  My  name  is  Mr. ,  of  Chicago,  and  I  Ve 

come  for  the  15,000  bushels  of  wheat  I  sent  you  the 
other  day." 

H.  "  Have  not  got  it,  sir ;  it 's  been  sold." 

C.  F.  "Very  well,  then.     I  want  the  money  for  it." 

H.  "  I  have  n't  got  the  money,  sir." 

-C.  F.  "  What  has  become  of  it,  sir  ? " 

H.  "  I  have  paid  my  debts  with  it." 

C.  F.  (In  great  indignation.)  "  You  are  a  scoundrel, 
sir." 

H.  (With  hauteur.)  "  Very  likely,  and  maybe  there  's 
a  pair  of  us.  I  'm  sorry  my  carriage  is  not  here,  as  I 
should  like  to  show  you  about  the  city." 

The  Chicago  bank  president  "left,"  naturally  in  no 
happy  mental  condition. 


FROM   '37   TO   '60.  323 

The  belief  that  the  panic  was  attributable  to  the 
great  diminution  in  discounts  and  call  loans  was 
shared  not  merely  by  journalists  and  the  general  mer- 
cantile class.  Nathan  Apple  ton,  himself  a  bank  direc- 
tor so  far  back  as  1814,  wrote  to  the  Boston  Advertiser, 
October  12,  1857,  that  the  further  contraction  of  New 
York  banks,  after  the  alarm  incident  to  the  failure  of 
the  Ohio  Trust  Company  ought  naturally  to  have  died 
out,  assuredly  "  brought  about  the  present  disastrous 
crisis." 

We  have  already  lingered  too  long  upon  the  commer- 
cial phases  of  the  panic,  although  it  would  be  easy  to 
fill  a  dozen  pages  with  characteristic  stories  of  runs  on 
the  banks,  of  the  troubles  of  traders  who  drew  out  their 
deposits  in  specie  and  then  passed  sleepless  nights  in 
guarding  their  uncomfortable  wealth,  of  young  mer- 
chants and  manufacturers  who  preserved  their  credit 
by  efforts  and  accidents  which  have  all  the  coloring  of 
romance.  The  fate  of  the  steamship  Central  America 
was  a  curious  episode  of  the  times.  She  was  on  the 
California  line,  and  her  arrival  was  anxiously  anticipated 
in  New  York,  as  her  heavy  freight  of  gold  would  have 
sensibly  relieved  the  market.  On  Saturday  the  12th 
of  September,  —  three  weeks  after  the  city  had  been 
thrown  into  wild  confusion  by  the  financial  tornado, 
and  men  grew  pale  and  weary  of  life  in  the  struggle 

for  money, the  officers  of  the  steamer  discovered  that 

she  had  sprung  aleak  in  stress  of  weather.  They  were 
already  far  out  on  the  Atlantic.  Every  effort  to  stop 
the  influx  of  water  proved  unavailing.  In  a  few  hours 


324  MEN   AND   MYSTEEIES   OF  WALL   STEEET. 

the  ship  would  founder.     The  passengers  were  at  once 
notified  to  put  themselves  in  readiness  for  the  boats. 

Then  ensued  one  of  those  scenes  in  which  the  empti- 
ness of  wealth  discloses  itself,  as  in  sudden  new  light,  to 
even  the  dullest  of  mankind.  The  waves  were  high,  the 
distance  from  shore  so  great  as  almost  to  forbid  hope. 
All  were  huddled  together  in  the  cabin,  —  a  few  women, 
one  or  two  tourists,-  but  mainly  stalwart  men  who  had 
risked  fever  and  years  of  desolate  toil  for  the  loved  ones 
of  a  home  whose  sunny  brightness  was  fading  away  for- 
ever. Every  one  had  money :  some,  thousands ;  many, 
their  ten  thousands.  A  bronzed-faced  miner,  catching 
the  impulse  of  the  moment,  opened  his  carpet-bag, 
weighted  with  freshly  minted  dollars,  and  strewed  its 
contents  over  table  and  chairs,  beseeching  his  terror- 
stricken  comrades  to  help  themselves.  The  crazed 
crowd,  half  unconscious  of  the  satire,  began  to  imitate 
the  example.  Purses,  through  whose  meshes  gleamed 
hundreds  upon  hundreds  of  gold-pieces,  were  tossed 
from  hand  to  hand.  The  sofas  were  covered  with  piles 
of  coin  in  which  no  one  cared  to  confess  ownership. 
One  individual,  lifting  a  huge  canvas-sack,  poured  out 
ten  thousand  dollars  of  gold-dust,  until  the  carpet  was 
thick  with  precious  metal.  This  man,  through  strange 
fortune,  was  almost  the  only  one  of  the  little  gathering 
who  reached  land  in  safety,  after  they  had  taken  to  the 
boats  ;  and  the  simple  story  of  that  hour,  coming  from 
his  lips,  gave  point  to  hundreds  of  sermons,  and  to 
abundant  editorials  from  those  pleasant  newspaper 
optimists  who  discover  an  advantage  even  in  the  fact 
of  "hard  times." 


FROM   '37   TO   '60.  325 

If  it  were  possible  to  know  the  secret  history  of  many 
of  the  great  commercial  houses  which  failed  during  the 
panic,  a  vast  number  of  new  illustrations  of  the  connec- 
tion of  the  Stock  Market  with  the  financial  depression 
would  come  to  light.  The  chief  partner  of  one  firm, 
early  in  '56,  became  so  overwrought  by  the  immense 
risks  and  profits  of  business  that  he  lost  his  mind. 
His  own  share  in  the  house  was  two  millions  and  a  half. 
Before  winter  the  balance-sheets  showed  a  clear  gain,  in 
a  single  season,  of  $  1,300,000.  The  victim  of  trade  was 
put  in  an  insane  asylum.  In  a  few  months  he  died. 
On  examining  his  assets  there  were  found  ten  thousand 
shares  of  Illinois  Central,  which  sold  at  the  time  of  his 
derangement  for  140.  As  all  the  instalments  had  not 
been  paid  in,  the  real  value  then  was  about  $  800,000. 
In  October,  1857,  the  heirs  put  them  in  the  market,  and 
realized  only  fifty  thousand  dollars  ! 

Illinois  Central  had  become  a  bankrupt  road;  yet 
even  in  failure  its  shares  were  in  high  repute,  compared 
to  other  Western  securities.  The  Chicago,  St.  Paul,  and 
Fond  du  Lac  Bailroad  Company  went  under  with  a  crash 
this  year,  its  stock  being  quoted  down  in  the  lower  nu- 
merals, and  its  bondholders  foreclosing.  William  B. 
Ogden  was  the  leading  spirit  in  this  road,  and  is  un- 
derstood to  have  lost  and  recovered  several  millions 
in  the  vicissitudes  of  the  company.  In  '59  the  famous 
Chicago  and  Northwest  Line  was  created  out  of  its  ruins ; 
but  during  the  interregnum  the  bonds  of  the  company, 
as  well  as  the  certificates  of  indebtedness  of  cities,  coun- 
ties, and  States  throughout  the  West,  were  in  ill  odor  on 


326  MEN   AND   MYSTEKIES   OF   WALL   STEEET. 

the  Stock  Exchange.  Whole  bales  of  worthless  paper  of 
this  character  were  piled  away  in  New  York  brokers'  and 
bankers'  offices.  The  luckless  victims  of  over-confidence 
found  language  fail  them  to  express  their  indignation.  On 
a  certain  day  in  November,  while  the  street  was  still  pros- 
trate under  the  collapse  of  August,  there  entered  one  of 
the  offices  which  had  dealt  most  heavily  and  fatally  in 
Western  stock  a  nattily  dressed  young  man  from  a  remote 
section  of  Wisconsin.  The  banker  recognized  him  at  once. 
"  Well,  Williams,  why  are  you  here  ? "  "  Just  to  have 
you  help  me  negotiate  some  bonds.  Our  county  has 
elected  me  agent.  We  have  printed  off  certificates  to 
be  issued  for  the  purpose  of  building  a  new  county- 
house  and  jail.  They  gave  me  the  choice  of  banker, 
and  so  I  concluded  to  let  you  have  the  job.  See  here, 
now,  the  discount  is  perfectly  awful,"  —  and  the  con- 
fident capitalist-borrower  from  Wisconsin  began  to  un- 
fold his  budget,  and  whisper  the  terms  on  which  the 
little  affair  was  proffered.  The  Wall  Street  veteran 
first  shaped  his  mouth  into  a  sharp  significant  whistle, 
then  slowly  rose  from  his  chair,  his  face  assuming  the 
utmost  solemnity  and  severity.  "  Now,  Williams,  if 
you  care  to  take  advice,  you  will  put  those  bonds  in 
your  pocket,  and  yourself  in  the  cars,  and  when  you 
reach  home  you  will  toss  all  that  waste  paper  in  the 
fire.  If  your  county  wants  money,  it  better  tax  itself 
for  it.  New  York  won't  risk  more  cash  in  wildcat  West- 
ern county-houses  any  longer ;  and,  hist !  you  can't 
disappear  too  soon,  for  if  they  get  wind  of  what  you  're 
after  hereabouts,  they  '11  —  Before  he  could  finish  his 


FKOM  '37  TO   '60.  327 

sentence  Williams  had  seized  his  hat,  edged  off  toward 
the  door  leading  into  the  outer  vestibule,  and  was 
bowing  himself  out  in  a  most  comical  condition  of 
terror.  The  banker,  from  whom  we  have  the  anecdote, 
adds  that  the  Wisconsin  county  agent  lingered  some 
thirty-six  hours  longer  about  town,  and  then  departed 
with  such  mental  illumination  as  effectually  cured  him 
of  all  further  attempts  at  bond  negotiations. 

From  the  spring  of  '58  to  '60  the  Stock  Board  very 
slowly  recovered  its  old  tone.  The  bear  element,  espe- 
cially the  Observatory,  was  in  its  glory.  Brokers  had  be- 
come fearful  of  forced  quotations.  "  Washing  "  had  been 
a  constant  trick  before  the  panic,  and  bids  were  now 
closely  scrutinized.  The  evidences  of  mismanagement 
and  fraud  in  great  corporations,  of  the  bribery  of  jour- 
nals, of  jobbing  in  Congress,  before  the  crash,  were 
now  cropping  out  in  all  directions.  Companies  which 
had  contrived,  by  great  sacrifices,  to  hold  out  during  the 
panic,  began  to  disclose  their  weakness  when  the  sub- 
sidence of  excitement  seemed  to  give  a  safe  opportunity 
for  frankness.  Not  a  few  succumbed ;  among  them  New 
York  and  Erie,  which  in  '59  failed  to  pay  the  interest 
on  its  mortgages,  and  was  subjected  to  instant  fore- 
closure and  the  appointment  of  a  receiver.  Rev.  Mr. 
Cuyler  visited  the  Board  about  the  time  of  the  Erie 
"  break,"  and  reported  his  views  to  a  religious  paper. 
The  sessions  were  then  held  in  Exchange  Place.  The 
clerical  on-looker  took  a  cheerful  view  of  things,  and 
was  confident  that  a  fair  proportion  of  these  keen  stock- 
heroes  were  not  unfitted  for  spiritual  communion.  He 


328  MEN   AND   MYSTERIES   OF   WALL   STREET. 

saw  one  hundred  and  twenty  men  sitting  at  tables,  with 
hats  on  head  and  books  in  hand.  When  favorite  stocks 
were  called  a  broker  would  spring  up,  fling  himself  into 
the  middle  of  the  room  "  shaking  his  finger  violently, 
gesticulating,  shouting,  vociferating  '  I  '11  take  you  up,' 
'  Seventy-five  for  the  lot,'  '  That 's  my  bid/  '  Seller  thirty 
days.' "  Of  -the  Ursa  Major  of  Erie  we  are  told,  "  His 
financial  fame  is  world- wide.  While  the  bids  are  made, 
the  workings  of  his  countenance  remind  us  of  Brougham 
in  the  House  of  Lords.  He  steps  out  from  his  desk 
and  snaps  his  finger  toward  another  broker,  calling  out, 
'  I  '11  take  your  lot  at  thirty  days.' "  The  picture  has 
the  truth  of  a  photograph,  but  since  the  war  brokers 
jumble  up  their  bids  in  fewer  words,  and  with  more 
precision  than  is  indicated  in  the  phrase  attributed  to 
the  king  bear. 

What  was  the  full  value  of  the  stocks  and  bonds 
dealt  in  at  this  time  by  the  Stock  Exchange  ?  It  is  a 
question  difficult  of  answer,  as  no  complete  statement  is 
extant,  and  the  labor  of  separating  the  additions  of  in- 
debtedness, through  stock  watering  and  new  issues  of 
bonds  in  the  last  ten  years,  would  be  very  great.  To 
estimate  it  at  one  sixth  of  the  present  bulk  of  securi- 
ties would  be  to  do  more  than  justice  to  the  past.  One 
ninth  would  be  more  nearly  accurate.  It  should  further 
be  noted,  that  all  tlie  great  stocks  and  State  or  railroad 
securities  were  then  at  a  far  larger  percentage  below  par 
than  they  are  now  above.  The  actual  capital  ^invested 
was,  therefore,  disproportionately  small.  Probably  where 
one  hundred  millions  are  now  employed,  not  ten  million 


FROM   '37   TO   '60.  329 

was  then  in  use.  An  able  writer  of  the  period  pre- 
dicted that  the  wonderful  phenomenon  of  the  Paris 
Bourse  and  the  London  Stock  Exchange  would  find 
no  analogue  in  America.  We  had  no  great  titled  or 
moneyed  aristocracy  concentrating  the  whole  wealth  of 
the  nation  at  one  point,  drawing  their  resources  from 
remote  regions  and  spending  them  in  one  metropolis. 
There  was  no  such  centralization  of  government  or 
State  debts  as  would  enable  New  York  to  compete  with 
European  finance,  nor  any  "field  for  those  extensive 
combinations  which,  as  in  the  case  of  the  elder  Baring, 
would  yield  a  profit  of  a  million  and  a  half  in  three 
days."  Times  have  bravely  changed  since  this  prophecy 
was  written.  Jay  Cooke  can  match  the  story  of  Baring. 
Vauderbilt  at  one  stroke  in  '68  made  more  than  either 
of  the  Eothschilds  ever  earned  in  any  single  speculation. 
In  one  decade  New  York  has  attained  precisely  the 
central  figure  which  the  fine  reasoning  of  ten  or  twelve 
years  ago  proved  to  be  impossible ;  and  the  impulse  to- 
ward far  higher  grandeur  through  suboceanic  cables 
and  trans-continental  railroads  has  scarcely  begun  to  dis- 
close its  immense  force. 

Governments  in  '59  were  a  very  insignificant  item, 
but  there  was,  nevertheless,  a  certain  significance  in  the 
character  of  the  holders.  Two  thirds  of  our  national 
debt  was  in  foreign  hands  !  In  that  year  any  one  for- 
tunate enough  to  be  allowed  access  to  the  Sub-Treasury's 
books  would  have  found  among  the  chief  names  of 
creditors  only  a  few  Americans  of  note,  —  George  Pea- 
body,  John  J.  Astor,  William  B.  Astor,  and  Jacob  Little. 


330  MEN  AND   MYSTEKIES   OF  WALL   STKEET. 

A  key  to  this  may  be  discovered  in  the  fact,  that,  when 
Congress  went  into  the  market  about  this  period  to  bor- 
row a  few  millions,  it  could  not  place  the  loan  except  by 
twelve  per  cent  discount.  Outside  of  the  country,  how- 
ever, such  a  man  as  John  Lloyd  (Lord  Overstone)  held 
$  350,000.  Lord  Elgin  was  down  for  $  17,000.  Baring 
Brothers,  the  Rothschilds  of  both  Paris  and  London,  the 
nobility  of  Spain,  Italy,  Russia,  and  England  were  buy- 
ers. Asiatics  and  West-Indians  were  found  on  the  list. 
Macaulay  began  with  $  5,000  and  ended  with  $  30,000. 
De  Tocqueville,  Scribe  the  dramatic  author,  Pouchouke 
the  Paris  publisher,  Sontag,  Paul  Julien,  and  other 
minor  celebrities,  were  creditors.  When  war  came 
these  securities  were  returned  in  hot  haste ;  but  the  in- 
evitable tendency  of  Europe  for  American  investments 
was  shown  by  an  almost  immediate  reabsorption,  and  in 
the  subsequent  popular  subscription  throughout  Ger- 
many and  Holland  for  the  5-20s. 

Our  commercial  classes  had  become  exceedingly  cau- 
tious at  the  close  of  the  last  decade.  Trade  turned  to 
the  South  in  consequence  of  the  general  distrust  of  the 
West.  As  a  result  of  the  prevalent  timidity  there  was 
very  little  mercantile  paper  afloat,  and  the  banks  were 
compelled  to  restrict  their  loans  from  the  absence  of 
anything  which  would  authorize  discounting.  Money 
was,  therefore,  more  than  ever  a  "  drug  "  in  the  market. 
Vast  quantities  of  specie  were  collected  in  New  York 
The  bank  vaults  overflowed  with  it.  This  plethora 
reached  its  height  in  February,  1861,  and  the  final  sus- 
pension of  coin  payments  was  unquestionably  delayed 
by  this  cause. 


FKOM  '37  TO  '60.  331 

In   a  previous  chapter  we  have  called  attention  to 
the  low  state  of  railroad  stocks  in  I860.*     Vast  fortunes 


*  The  annexed  table  of  prices  during  1859,  1860,  and  1861  at  the 
Stock  Exchange  will  be  of  value  as  indicating  the  average  low  range 
at  which  securities  sold  and  the  degree  of  upward  fluctuations  effected 
by  bull  operators  :  — 
1859.                         1860.                         1861. 

Lowest. 

Highest. 

Lowest. 

Highest 

Lowest.  Highest. 

Indiana  5  per  cent    . 

85 

93 

86 

93 

75 

93 

Tennessee  6  per  cent    . 

.861 

93| 

64 

93 

341 

77 

Virginia  6  per  cent    . 

921 

991 

73 

95 

36 

80 

N.  Carolina  6  per  cent 

94i 

1011 

77| 

100 

44 

821 

Missouri  6  per  cent   . 

801 

871 

61 

84J 

35 

72 

Louisiana  6  per  cent     . 

90 

96 

94 

994 

45 

771 

California  7  per  cent 

80 

861 

82 

95 

711 

88 

Reading 

351 

54| 

291 

491 

29J 

47f 

Michigan  Central     . 

38 

541 

35 

731 

39| 

611 

Michigan  Southern 

4 

211 

5 

25 

101 

201 

Panama 

1131 

137| 

106 

1461 

971 

121 

Illinois  Central    . 

53 

72 

511 

891 

551 

88J 

New  York  Central    . 

69 

86 

69 

921 

68 

82^ 

Erie    .... 

4 

171 

81 

43 

17 

40J 

Hudson  River 

30 

42| 

35 

66 

31  J 

491 

Harlem 

9 

141 

8 

231 

8| 

17 

Harlem  preferred 

33 

441 

27 

55 

201 

43 

Cleveland  and  Pittsburg     6 

10 

5 

151 

61 

17 

Cleveland  and  Toledo  . 

161 

33J 

18§ 

491 

201 

38| 

Cleveland,  Col.  and  Cin 

.   91 

100 

86 

991 

90 

102 

Galena  and  Chicago 

601 

771 

55 

82| 

55 

741 

Rock  Island 

55f 

71 

421 

841 

30| 

62 

Chi.,  Bur.,andQuincy 

481 

61 

40 

92| 

51 

781 

Mil.  and  P.  du  Chien     , 

,       3 

131 

11 

161 

9 

23 

Canton  Company 

161 

20 

14 

231 

8 

15 

Pennsylvania  Coal 

791 

85| 

73£ 

881 

72 

81 

Del.  &  Hudson  Co.    . 

87 

101 

80 

1011 

72 

92 

Cumberland  preferred  . 

11 

241 

8 

171 

4 

91 

Pacific  Mail     .         .         671        93J          70      107*  50      10° 


332  MEN   AND   MYSTERIES   OF  WALL   STKEET. 

were  open  to  any  one  who  chose  to  invest.  Yet  stocks 
which  sold  for  a  song  remained  stationary  for  months, 
and  exhibited  immaterial  appreciation  even  in  '62. 
That  year  there  was  a  sharp  upward  movement.  The 
rise  in  gold  and  the  great  expansion  of  legal  tender 
were  unquestionably  the  source  of  the  speculative  ex- 
citement ;  but  it  was  not  less  due  to  an  obscure  cause, 
the  origin  of  which  dates  back  to  '57.  The  country  had 
been  importing  and  manufacturing  heavily.  The  crash 
threw  this  vast  surplus  stock  into  the  auction-room. 
Even  as  late  as  1860  the  slaughtering  of  dry  goods  con- 
tinued, and  servant-girls  found  it  easy  to  dress  in  fine 
silk  and  satin.  Eetailers  and  jobbers  throughout  the 
rural  districts  bought  immense  supplies,  and  for  two 
years  were  able  to  rely  upon  their  home  stock  without 
recourse  to  the  city.  When  the  swelling  tide  of  green- 
backs flowed  in,  agricultural  products  went  up,  and  farm- 
ers' families,  with  more  money  in  hand  than  ever  before, 
thronged  the  adjacent  villages  and  towns,  and  stripped 
the  shop-shelves  of  even  their  stalest  goods.  The  dealers 
instead  of  buying  again  proportionately,  contented  them- 
selves with  purchasing  small  quantities,  and  invested 
the  main  bulk  of  their  profits  in  the  stock  market.  The 
stagnancy  which  New  York  merchants  experienced  in 
'63  finds  its  solution  in  this  fact ;  and  the  judiciousness 
of  the  country  speculators  was  shown  in  the  great  in- 
crease in  the  average  wealth  of  traders  throughout  the 
Union,  fortunes  of  fifty  thousand  being  less  common  in 
1860  than  those  of  one  hundred  thousand  in  1865. 


PROSPECTIVE.  333 


CHAPTER    XVII. 

PPvOSPECTIVE. 


billion  of  dollars,  invested  in  securities  to 
_L  which  the  New  York  Stock  Exchange  in  this  year 
of  grace  1870  affixes  its  daily  stamp  of  value,  is  a  sum- 
total  which  may  well  confuse  the  imagination.  It  ex- 
ceeds the  sale  worth  of  all  the  cotton,  corn,  wheat,  oats, 
buckwheat,  barley,  potatoes,  rye,  hay,  and  dairy  produce 
of  the  Union  during  1869,  together  with  the  earnings  of 
all  our  fisheries,  and  the  manufactories  in  iron,  leather, 
wool,  cotton,  and  paper  in  the  same  period.  The  yearly 
fluctuations  of  some  of  the  active  stocks  are  equal  to 
what  in  the  grain  market  would  make  a  barrel  of  flour 
worth  at  one  time  $  12,  again  $  9,  and  the  next  day  $  4 
or  $  6.  Western  Union  has  sold  for  250,  and  is  now 
quoted  at  32.  Wheat,  subject  to  similar  vacillations, 
would  bring  in  the  farmer  $  1.25  a  bushel  at  one  season, 
and  15  cents  a  bushel  at  another.  And  although  such 
startling  vibrations  are  not  the  rule  of  the  Share  Board, 
the  ordinary  changes  which  mark  its  weekly  business, 
if  transferred  to  the  departments  of  industry  or  agricul-  ' 
ture,  would  affect  ceaseless  and  terrible  derangements. 

However  slight  may  be  the  direct  interest  of  the  great 
producing  class  in  these  phenomena  of  the  Stock  Mar- 
ket, the  secondary  and  less  obvious  consequences  of 


334  MEN  AND   MYSTERIES   OF  WALL   STREET. 

traffic  in  the  evidences  of  investment  reach  far  into  the 
affairs  of  every  household  in  the  nation.  The  future  of 
our  paramount  money-mart  is,  therefore,  of  exceeding 
importance  not  less  to  the  farmer  and  artisan  than  to 
the  capitalist  and  statesman. 

In  approaching  a  subject  involving  so  much  and 
penetrating  so  deeply,  it  is  desirable  to  disembarrass  the 
mind  from  certain  prejudices.  There  is,  for  example,  a 
vast  amount  of  pure  speculation  in  Wall  Street.  With- 
out entering  into  the  metaphysics  of  speculation  itself, 
or  endeavoring  to  discover  whether  there  be  a  profession 
or  pursuit  in  life  free  from  the  active  element  of  hazard, 
it  cannot  be  unjust  to  call  attention  to  the  large  arena 
over  which  this  impropriety  has  extended.  "  Comers  " 
are  not  original  with  stock-brokers.  In  '68  the  prin- 
ciple was  applied  to  corn  in  Chicago.  In  '65  it  was  put 
in  operation  upon  wheat  in  California.  Years  before  it 
was  employed  in  the  same  way  in  Australia.  Ouvrard, 
the  great  stock-operator  of  Europe  in  the  last  century, 
began  his  career  by  contracting  for  all  the  paper  which 
should  be  manufactured  in  France  for  the  two  years 
succeeding  1789.  The  Kevolution  had  just  broken  forth, 
and  he  saw  instantly  that  in  pamphlets,  newspapers, 
etc.,  the  demand  would  be  immense.  Starting  with  5,000 
francs,  this  corner  made  him  a  capitalist.  His  next  oper- 
ation displayed  even  higher  prescience.  France  pro- 
tected the  products  of  her  colonies.  The  Revolution  was 
laying  the  train  for  a  ruinous  explosion  in  St.  Domingo. 
Coupling  the  two  facts,  he  went  to  Bordeaux,  and  in 
conjunction  with  a  large  importing-house,  bought  coffee 


PROSPECTIVE.  335 

and  sugar  in  immense  quantities.  At  one  venture  he 
cleared  nearly  a  million  francs,  and  immediately  rein- 
vested it,  purchasing  the  entire  annual  yield  of  the 
colony.  He  was  at  once  the  heaviest  capitalist  in  Paris. 
The  city  of  Mexico  is  on  an  island  in  the  midst  of  a 
lake.  Francis  Baring,  son  of  Lord  Ashburton,  while  there 
as  a  tourist,  saw  the  opportunity  for  a  startling  specu- 
lation, and  in  a  few  days  possessed  himself  in  fee  sim- 
ple of  the  entire  shore  circuit  of  the  water.  The  whole 
cost  was  £  200,000,  and  of  this  he  paid  one  fifth  on  the 
spot.  Had  not  Baring  Brothers  been  frightened  by  the 
daring  scope  of  the  scheme, — their  timidity  leading  them 
to  order  its  immediate  abandonment,  —  this  operation 
would  probably  have  resulted  in  enormous  profits.  The 
most  audacious  and  lucrative  of  all  the  speculations  of  the 
Eothschilds  was  outside  of  the  London  Stock  Exchange. 
This  house,  through  shrewd  diplomacy,  obtained  the 
control  of  the  only  quicksilver-mines  in  Europe.  The 
price  of  the  lively  metal  was  raised  to  an  extortionate 
figure.  So  excessive  was  the  selling  rate  that  all  Chris- 
tendom, in  eagerness  to  obtain  cheap  calomel,  fell  to 
scraping  the  backs  of  old  mirrors.  Political  economy 
gives  to  the  class  of  men  who  make  these  vast  com- 
binations the  name  of  monopolists.  But  they  are  simply 
speculators  in  successful  corners,  including  in  their  grasp 
commodities  of  far  more  vital  importance  to  the  public 
than  are  paper  values. 

Wall  Street  sells  what  it  has  not  in  hand,  but  what  it 
believes  can  be  obtained  at  a  lower  price  before  the  time 
of  delivery.  All  our  great  grain-merchants,  cotton-factors, 


336  MEN  AND   MYSTEEIES   OF   WALL   STREET. 

wholesale  dealers  in  certain  descriptions  of  manufac- 
tured goods,  do  the  same.  Heavy  settlements  were  made 
during  the  war  by  prominent  New  York  houses  who 
had  agreed  to  deliver  paper  and  woollens  to  a  fixed 
amount  and  within  a  given  time,  but  were  victims  of 
the  sudden  summer  drouth  which  stopped  the  mills  of 
New  England  for  several  weeks.  Operations  in  copper 
and  coal  under  precisely  the  same  conditions  as  exist  in 
short  sales  are  very  common,  and  not  infrequently  come 
to  light  in  lawsuits,  where  the  decision  of  court  is  almost 
invariably  against  the  contracting  party.  We  call  at- 
tention to  these  facts,  not  to  defend  speculation,  but  to 
show  that  the  methods  of  the  Stock  Market  are  coex- 
tensive with  trade,  and  have  their  origin,  not  in  any  par- 
ticular school,  or  rather  in  the  universal  school  whose 
first  primary  lesson  is,  "  Make  money." 

Moreover,  although  it  is  hard  to  disassociate  the  two 
in  the  mind,  there  is  an  essential  distinction  between  the 
cliques  and  the  brokers.  The  latter  are  sometimes  the 
instruments  of  the  former ;  but  it  nevertheless  remains 
true  that  the  street  itself  is  not  in  sympathy  with  the 
great  operators.  The  latter  rob  the  brokers  by  destroy- 
ing their  customers.  To  use  the  slang  of  the  financial 
quarter,  they  "  milk  the  street."  Except  in  one  par- 
ticular, the  New  York  brokers  really  stand  in  the 
position  of  conservators  of  speculation.  They  sell 
"  proxies  "  on  the  stock  which  by  the  luck  of  the  mar- 
ket falls  in  their  hands.  In  Cleveland  and  Pittsburg 
and  in  Erie  this  open  barter  has  been  one  of  the  scan- 
dals of  the  times.  Naturally,  the  more  .entirely  an 


PROSPECTIVE.  337 

active  stock  is  bought  at  the  Exchange,  the  greater 
the  opportunity  for  irresponsible  leaders  to  secure  con- 
trol of  important  corporations.  Were  this  vice  of  wide 
extent,  the  street  would  become  the  Pretorian  Guard 
of  our  railway  financiers  ;  and  that  it  is  less  common, 
and  is  becoming  more  generally  accepted  as  disrepu- 
table by  the  influential  and  controlling  members  of 
the  Stock  Board,  is  indubitable.  Apart  from  this,  all 
the  worst  evils  of  stock  manipulations  have  their  birth 
and  abiding-place  in  the  secret  counsels  of  the  Rings 
and  Cliques,  —  of  that  association  of  railway,  steam- 
ship, and  telegraph  directors,  presidents,  and  heavy 
shareholders,  who  find  it  consonant  with  their  con- 
sciences and  their  purses  to  water  stock,  pay  divi-' 
dends  out  of  capital,  to  invent  that  anomalous  feature 
in  finance  known  as  capitalized  earnings,  to  utter  un- 
authorized new  stock,  to  "  pass "  dividends  in  order  to 
break  the  market ;  in  a  word,  to  do  everything  which 
will  keep  them  outside  of  prison-bars  by  means  of 
shrewd  lawyers  and  complaisant  judges,  if  only  in  do- 
ing all  this  they  can  manage  to  make  three  dollars 
grow  where  but  one  grew  before.  The  annals  of  Ameri- 
can financiering  are  not  particularly  exhilarating.  The 
exhibition  of  fraud  in  high  places,  and  of  effrontery 
on  the  part  of  responsible  managers,  bordering  upon 
the  sublime,  which  has  characterized  the  past  few 
years,  is  not  calculated  to  inspire  over-confidence  in 
the  future.  Yet  even  here  we  are  not  without  con- 
solations. If  the  present  is  dark,  was  the  past  brighter? 
If  speculatipn  in  the  United  States  has  discouraging 

15*  V 


338  MEN  AND   MYSTEEIES   OF  WALL   STREET. 

aspects,  are  the  records  of  the  London  Stock  Exchange 
and  the  Paris  Bourse  clean  of  stain  ?  The  English  papers 
have  recently  been  laden  with  fierce  denunciations  of 
the  New  York  Stock  Market,  and  it  cannot  be  gain- 
said that  their  criticisms  are  just  and  opportune ;  but 
the  inference  underlying  these  reproaches,  the  impli- 
cation that  British  capitalists  are  guileless,  and  that 
stock-jobbery  is  a  modern  and  American  invention, 
is  sadly  inconsistent  with  facts.  In  the  old  South 
Sea  days,  £  574,000  were  paid  to  influence  votes  and 
secure  the  enlargement  of  franchise  by  a  single  com- 
pany. During  the  railway  fever  of  1824-25,  news- 
paper exaggerations,  neatly  cooked  reports,  captivating 
prospectuses,  were  the  main  machinery  of  speculation. 
The  press  was  bought  up  by  the  gift  of  options  in 
shares  which  were  sold  out  at  a  premium.  The  Lon- 
don Morning  Chronicle  remarked :  "  We  blush  to  say 
few  editors  of  newspapers  in  the  metropolis  are  not 
to  be  found  in  the  list  of  those  benefited."  In  John 
Francis's  "  History  of  English  Railways,"  one  will  find 
a  hundred  illustrations  of  the  keenness  of  cockney  rail- 
way cliques.  One  road,  in  1845,  placed  certificates  of 
stock  in  the  hands  of  an  agent.  This  broker,  by  order 
of  directors,  bought  large  amounts  of  scrip  through  time 
sales.  When  the  shorts  tried  to  get  the  paper  and 
thus  meet  their  contracts,  they  were  informed  that 
the  company  would  make  no  issue  for  the  present ! 
Of  course  the  premium  had  to  be  paid  over,  and  the 
short  interest  suffered  proportionately.  Another  com- 
pany invited  applications  for  shares.  The  number  was 


PEOSPECTIVE.  339 

to  be  limited.  Deposits  on  stock  were  fixed  at  22 
shillings.  The  directors  bought  fifty  times  the  amount 
to  be  issued,  and  'Change  Alley  was  cornered  at  once. 
Perhaps  the  most  signal  example  of  the  corner  in  Lon- 
don speculation  is  afforded  by  the  operations  of  a  clique 
in  the  Huddersfield,  Halifax,  and  Bradford  Union  Rail- 
road during  1845.  No  scrip  had  appeared  ;  nevertheless, 
a  vast  number  of  shares  were  sold  for  future  delivery 
at  20  and  30  s.  The  entire  capital  stock  was  only  15,000, 
but  the  shorts  held  75,000  shares.  The  line  was 
looked  upon  as  a  failure,  and  every  one  was  counting  on 
a  fortune  by  the  fall.  Suddenly  it  was  announced  that 
this  road  was  to  be  amalgamated  with  the  West  Bid- 
ing Union  Line,  one  of  the  most  popular  fancies  in  the 
market.  At  a  jump  the  stock  of  Huddersfield,  Hali- 
fax, and  Bradford  Union  went  to  £  15.  The  specu- 
lators were  ruined,  and  the  brokers  were  all  deeply 
involved.  The  Stock  Exchange,  the  day  after  the 
news,  shook  with  the  wild  encounter  of  bull  and  bear ; 
and  so  inextricably  was  "the  city"  involved  that  the 
rooms  of  the  Board  were  closed  for  a  week  to  repair 
losses.  The  mere  bagatelle  of  five  million  dollars  threw 
the  London  Exchange  into  a  six  days'  confusion;  and 
yet  the  English  journals  are  scandalized  that  the  busi- 
ness of  the  New  York  Gold  Eoom  should  be  deranged 
by  transactions  covering  one  hundred  times  that  amount ! 
That  acme  of  gambling,  the  sale  of  privileges,  called 
succintly  in  Wall  Street  by  the  name  of  "puts"  and 
"  calls,"  is  an  old  English  speculative  invention.  They 
"  carry "  stock  perpetually,  styling  the  act  "  continua- 


340  MEN  AND   MYSTERIES   OF  WALL   STREET. 

tion."  Gold  corners  are  a  part  of  the  history  of  the 
London  Exchange.  The  first  attempt  of  the  Bank  of 
England  to  renew  specie  payments  after  the  Continental 
war  with  Napoleon  was  frustrated  by  British  operators. 
During  the  Crimean  campaign  the  London  banks  de- 
pended upon  the  receipts  of  bullion  from  Australia 
and  California  for  their  preservation  from  suspension. 
Sometimes  the  ships  were  delayed,  throwing  the  money- 
market  into  a  whirl  of  excitement.  "  Capitalists,"  said 
Chapman,  the  manager  for  Overend,  Gurney,  &  Co.,  in  his 
testimony  before  the  Parliamentary  committee,  —  "  capi- 
talists availed  themselves  of  these  crises  to  make  enor- 
mous profits  put  of  those  who  fell  victims  to  them. 
There  cannot  be  a  doubt  of  it."  "  There  is  more  than 
one  capitalist  who  can  withdraw  from  the  circulating 
medium  £1,000,000  or  £2,000,000  of  notes,  if  they 
have  an  object  to  attain  by  it,  —  to  knock  down  the 
funds  and  create  a  scarcity.  One  morning  there  was  a 
great  demand  for  money  in  the  Stock  Exchange  ;  no- 
body knew  how  it  was.  A  person  came  and  asked  me 
whether  I  would  lend  money.  I  said,  '  Certainly.'  He 
said, '  I  will  take  £  50,000  of  you  at  seven  per  cent.'  I 
was  astonished.  Our  rate  of  money  was  much  below 
that.  I  said, '  You  shall  have  it.'  Shortly  the  man  re- 
turned and  borrowed  £  50,000  at  seven  and  a  half ;  next 
£  100,000  at  eight,  and  finally  much  more  at  eight  and 
a  half.  It  afterwards  turned  out  that  there  had  been 
a  sudden  withdrawal  from  the  market  which  created 
the  great  pressure."  As  first-class  bills  in  1852  could 
be  discounted  for  one  and  three  quarters  per  cent,  the 


PROSPECTIVE.  341 

rise  to  eight  and  a  half  was  something  as  extraordinary 
as  the  high  rates  of  interest  in  New  Jork  at  the  spring 
and  fall  stringency  of  '68.  »It  is  needless  to  note  in 
passing,  that  the  affair  detailed  by  Mr.  Chapman  was 
the  "  lock-up  "  pure  and  simple,  —  an  invention  absurdly 
attributed  to  recent  American  financiering. 

It  would  be  easy  to  multiply  these  illustrations.  The 
record  of  English  speculation  is  crowded  with  examples 
of  the  most  rapid  and  ruinous  fluctuations  in  price,  of  a 
frenzy  for  "  stock  gambling "  extending  to  all  classes, 
and  carried  to  a  pitch  of  madness  beyond  the  imagina- 
tion of  a  veteran  New  York  broker.  Crossing  the  Chan- 
nel, one  finds  at  the  French  capital  all  the  tactics  and 
strategy  of  a  great  money-market  in  high  perfection. 
The  Parquet  constitute  the  "  regular "  dealers.  The 
Coulisse  are  the  curbstone  brokers.  Cash  sales  are  in- 
frequent, and  almost  the  whole  bulk  of  business  is  in 
that  Rouge  et  noire  branch  of  stock  speculation,  the 
"  privilege."  The  technical  name  is  MarcM  &  prime,  and 
on  the  15th  and  30th  of  every  month  the  owner  of  this 
call  must  decide  whether  he  takes  the  stock  or  not.  At 
all  events  he  must  pay  the  premium.  Under  these 
auspices  the  scenes  of  the  Paris  Bourse  are  character- 
ized by  an  abandon  and  recklessness  which  leave  noth- 
ing for  the  student  of  human  nature  to  desire.  There 
are  money  stringencies,  fierce  panics,  overselling  of  the 
market,  grand  combinations,  gigantic  failures.  Every 
year  has  its  fringe  of  defalcations.  Every  stock  has  a 
history  of  sharp  rise  and  fall.  If  we  go  to  Vienna  we 
shall  find  a  city  whose  market  has  hardly  recovered  from 


342  MEN   AND   MYSTERIES   OF   WALL   STREET. 

the  terrific  domestic  revulsion  of  '69.  Amsterdam,  Ham- 
burg, Trieste,  Smvriia,  Marseilles,  Madrid,  Odessa,  all 
witness  the  same  capacity^for  high  speculation,  stock- 
jobbing, and  financial  irregularities. 

The  bearing  of  these  facts  upon  Wall  Street  finance 
must  be  apparent  to  the  least  thoughtful.  They  prove 
that  speculation  in  the  United  States  has  nothing  unique, 
peculiar,  or  unparalleled.  They  furthermore  afford  room 
for  a  conjecture  that  much  of  the  present  exaggeration 
of  stock  manipulation  is  ephemeral,  a  part  of  the  na- 
tional education,  one  of  those  diseases  which  attack  the 
young,  and,  though  not  wanting  in  pain  and  discomfort, 
are  nevertheless  not  fatal  nor  of  long  continuance.  De- 
spite the  speculative  opportunities  of  London  and  the 
European  tawns,  the  controlling  influences  are  conserva- 
tive ;  and  in  New  York  since  the  war  there  are  not  a  few 
evidences  that  the  current  is  setting  in  a  wholesome 
direction.  The  rule  in  force  at  the  Stock  Exchange,  ren- 
dering a  registry  of  shares  obligatory  on  corporations, 
is  a  measure  whose  influence  cannot  be  overestimated. 
Even  the  infamies  of  Erie  have  not  been  without  a  cer- 
tain advantage,  and  the  very  height  of  recent  disorders 
would  seem  to  indicate  that  the  poison  in  the  financial 
system  is  working  to  a  head.  A  probable  consequence 
will  be  the  establishment  of  more  rigorous  guaranties, 
and  the  enforcement  of  restrictions  which  will  give  to 
a  large  proportion  of  the  stock  list  a  greater  defined 
value. 

The  enlargement  of  the  scope  of  the  New  York  Stock 
Exchange  greatly  depends  at  present  upon  Europe.  We 


PEOSPECTIVE.  343 

are  a  borrowing  nation.  The  Panama  Bailroad  is  the 
nearest  approach  to  a  strictly  non-national  security  on 
the  list  of  the  Exchange.  All  else  is  rigidly  domestic. 
Our  growth  through  foreign  connections  hinges,  there- 
fore, upon  the  repute  of  our  stocks  and  bonds  abroad. 
Germany,  Holland,  and  England  hold  already  about  one 
billion  of  American  securities  in  governments,  railway 
bonds  and  stocks,  State  stocks.  In  the  face  of  current 
speculative  demoralization,  this  is  a  wonderful  exhibit. 
With  the  increase  of  a  healthier  tone  in  our  finance,  and 
the  creation  of  fresh  safeguards  upon  the  management 
of  corporations,  thereby  rendering  dividends  more  secure 
and  permanent,  the  confidence  in  American  stock  in- 
terests will  expand  proportionately.  The  suboceanic 
cables  have  even  now  linked  the  finances  of  the  two 
worlds.  New  York  brokers  pay  a  million  a  year  for 
telegrams  from  L(  ndon  alone.  This  constant  intercourse 
requires  simply  a  deeper  faith  in  the  substantial  charac- 
ter of  the  commodities  dealt  in  upon  the  Broad  Street 
Exchange  to  open  out  very  wide  results.  Out  of  the 
ten  billion  dollars  of  stocks  and  funds  on  the  list  of  the 
London  Stock  Board,  American  securities  amount  to  a 
few  insignificant  millions.  At  the  Paris  Bourse  the 
Southern  Pacific  Ptailroad  is  the  only  stock  from  the 
United  States  privileged  to  daily  quotation.  The  great 
bulk  of  the  United  States  bonds  and  shares  owned 
abroad  are  bought  and  sold  only  through  private  bankers. 
Confidence  will  change  all  this.  New  York  will  act 
with  Europe.  The  excitement  at  one  point  will  be 
quieted  by  the  repose  at  another.  In  the  September 


344  PROSPECTIVE. 

gold  flurry,  it  was  a  despatch  from  London  quite  as  much 
as  the  message  from  Washington  which  checked  the  bul- 
lion conspiracy.  The  knowledge  that  Wall  Street  was 
calm  under  the  news  of  the  Overend,  Gurney,  &  Co. 
failure  of  '66  did  much  to  lessen  the  progress  of  panic  in 
the  English  financial  capital.  It  remains  for  the  brokers 
of  the  Stock  Exchange  to  decide  whether  they  will  seek 
the  petty  profits  of  a  speculation  marred  by  grave  faults, 
or  will  cast  their  influence  still  farther  and  with  more 
strenuous  emphasis  against  the  encroachment  of  the 
cliques.  The  former  means  isolation.  The  latter  will 
be  prelusive  of  an  expansion  in  international  relations 
which  will  make  New  York  imperial,  and  Wall  Street, 
what  its  pivotal  position  demands  and  allows,  the  para- 
mount financial  centre  of  the  globe. 


THE  END. 


- 


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